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Leibniz-Informationszentrum
Wirtschaft
Leibniz Information Centre
for Economics
Mayer, Colin
Working Paper
Financing the new economy: Financial institutions
and corporate governance
WIDER Discussion Papers // World Institute for Development Economics (UNU-WIDER),
No. 2001/04
Provided in Cooperation with:
United Nations University (UNU), World Institute for Development
Economics Research (WIDER)
Suggested Citation: Mayer, Colin (2001) : Financing the new economy: Financial institutions
and corporate governance, WIDER Discussion Papers // World Institute for Development
Economics (UNU-WIDER), No. 2001/04
This Version is available at:
http://hdl.handle.net/10419/52940
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Figure 1
The development and financing of entrepreneurial firms
High
Level of investment assumed by investor
Founders, friends,
family
Business angels
Venture capitalists
Non-financial
companies
Equity markets
Low
Commercial banks
Seed
Start-up
Early growth
Established
Stages of development
Source: Van Osnabrugge and Robinson (2000).
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Figure 2
The structure of the US venture capital industry
Limited partners
Pension funds
Corporations
General partners
Insurance companies
Venture capital firms
Entrepreneurs
Individuals
Foundations
Foreign investors
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Figure 3
Stages of entrepreneurial finance
Markets
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Individual
investors business angels
Families
friends
Entrepreneurs’ own finance
Figure 4
The financing of Amazon.com (1994-99)
Time line
Price/share
Sources of funds
1994 - July to Nov
$.001
Founder: Jeff Bezos starts Amazon.
Com with $10,000, borrows $44,000.
1995 - Feb to July
$.1717
Family: Founder’s father and mother
invest $245,500.
1995 - Aug to Dec
$.1287-.3333
Business Angels: 2 angels invest
$54,408.
1995/6 - Dec to May
$.3333
Business Angels: 20 angels invest
$937,000
1996 - May
$.3333
Family: Founder’s siblings invest
$20,000.
1996 - June
$2.3417
Venture Capitalists: 2 venture capital
funds invest $8 million.
1997 - May
$18
IPO: 3 million shares issued raising
$49.1 million
1997/8 - Dec to May
$52.11
Bond issue: $326 million bond issue.
Source: Smith and Kiholm (2000).
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