ZEW Hosts Third International Conference on the Dynamics of Entrepreneurship

On June 6 and 7, 2016, the Centre for European Economic Research (ZEW), together with the Mannheim Centre for Competition and Innovation (MACCI) and the University of Mannheim's Institute for Small Business Research (Institut für Mittelstandsforschung, ifm), hosted the "Third International Conference on the Dynamics of Entrepreneurship" (CoDE). The two-day event enabled the more than 80 participants to exchange findings from current research relating to entrepreneurship.

39 presentations, which had been chosen from the approximately 120 submitted, served as a basis for a series of parallel sessions. Topics of discussion included the conditions for financing new business start-ups. The significance of venture capital as well as the relatively new means of financing known as crowdinvesting was discussed. Crowdinvesting is a mechanism, which enables many individuals to invest usually a small, but in some cases also a relatively large amount of capital in a new business. The presentations provided a sound overview of how exactly crowdinvesting or crowdfunding actually works.

Current issues in entrepreneurship addressed in four keynote speeches

In addition, ZEW invited four renowned researchers to deliver keynote speeches regarding issues of current relevance for entrepreneurship. Javier Miranda (US Bureau of the Census, Washington) spoke about the decrease in the number of high- and fast-growing new businesses being established in the US since the turn of the century. Rosemarie Ziedonis (Boston University) gave a presentation on the results of her research project, which considered the difficulties faced by young high-tech businesses in securing third party funding. Ziedonis illustrated that credit is more easily accessible to firms holding patents, which can be liquidated, as well as to firms which received financing commitments from venture capitalists for the subsequent funding rounds. In his keynote speech, Thomas Åstebro (HEC Paris) spoke about the evaluation of a training programme designed to stimulate social entrepreneurship. The results suggest that such a programme is not suitable for this purpose. Åstebro emphasised, commenting, "we can't teach entrepreneurship", that educational programmes in general, also in other fields of the economy, cannot be used to boost entrepreneurship. Finally, Guido Bünstorf (Kassel University) gave a talk on entrepreneurial activities in the laser industry in Germany and its development over the last 50 years. In contrast to the US, where we see a concentration on only a few large firms, the number of businesses in Germany has remained stable at a high level since 2007. This difference can be explained in view of the relatively high proportion of new businesses in Germany which are established as university spin-offs – i.e. businesses founded by individuals with a background in research or academia. This improves the survival chances of young businesses.

Science, business and politics exchange ideas on venture capital

The panel discussion, which took place on the first day of the conference, focussed on the importance of venture capital as a source of finance for growth-orientated, young and innovative businesses. Researchers (Georg Licht, ZEW and Reint Gropp, IWH Halle) discussed this question with representatives from business (Claus Kremoser, Phenex GmbH, Heidelberg), EU institutions (Frank Lang, European Investment Fund, Luxembourg) and politics (Johannes Velling, BMWi). The participants in the discussion agreed that the supply of capital for young businesses in Europe is too limited to facilitate fast growth. In order to achieve this, high-tech businesses must be able to acquire a lot more venture capital, as is the case in the US. The question as to whether political intervention should be made in order to promote the provision of equity capital or loans for young innovative businesses sparked controversial debate. It was suggested that the framework conditions in Europe must be changed in order to make the provision of venture capital more attractive. The restrictions on stock market flotation for young firms must, for example, be eased (as was the case in the so-called "Neuer Markt"). This would increase potential profit margins for investors, subsequently attracting venture capital funds from the US to Europe.