TY  - JOUR
AU  - Nanda, Ramana
AU  - Rhodes-Kropf, Matthew
TI  - Financing Entrepreneurial Experimentation
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 21278
PY  - 2015
Y2  - June 2015
DO  - 10.3386/w21278
UR  - http://www.nber.org/papers/w21278
L1  - http://www.nber.org/papers/w21278.pdf
N1  - Author contact info:
Ramana Nanda
Harvard Business School
Rock Center 317
Soldiers Field
Boston, MA 02163
Tel: 617/496-2783
E-Mail: rnanda@hbs.edu

Matthew Rhodes-Kropf
MIT Sloan School of Management
100 Main Street, E62-617
Cambridge, MA 02142
E-Mail: mattrk@mit.edu
M1  - published as Ramana Nanda, Matthew Rhodes-Kropf. "Financing Entrepreneurial Experimentation," in Josh Lerner and Scott Stern, editors, "Innovation Policy and the Economy, Volume 16" University of Chicago Press (2016)

M3  - presented at "Innovation Policy and the Economy 2015", April 14, 2015
AB  - The fundamental uncertainty of new technologies at their earliest stages implies that it is virtually impossible to know the true potential of a venture without learning about its viability through a sequence of investments over time. We show how this process of experimentation can be particularly valuable in the context of entrepreneurship because most new ventures fail completely, and only a few become extremely successful. We also shed light on important costs to this process of experimentation, and demonstrate how these can fundamentally alter both the rate and direction of startup innovation across industries, regions and periods of time.
ER  -