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date: 05 March 2021

Abstract and Keywords

How are new industries financed? Specifically, for industries pioneered by entrepreneurial firms, where do entrepreneurs acquire the initial resources to start and grow their firms? This article reviews the literature on the role of finance in the emergence of new industries. It begins with a brief review of the central problems of finance of the high-risk, high-growth ventures that often play an important role during the emergence of new industries. It then presents several mini-case studies on new industries. It explores the ways that public markets and, more recently, venture capital limited partnerships have altered the industry emergence process, and thereby evaluates the literature's view of the role of these institutional arrangements.

Keywords: new industries, entrepreneurial firms, finance, high-growth ventures, public markets, venture capital

Brent Goldfarb

Brent Goldfarb is associate professor of management and entrepreneurship at the Robert H. Smith School of Business at the University of Maryland. Dr. Goldfarb studies emerging industries, finance of early stage ventures, and how the production and exchange of technology differs from more traditional economic goods. His work has been published in several journals, including the Journal of Financial Economics, Management Science,and Strategic Management Journal.Many press outlets and blogs have also covered his work, including the The Wall Street Journal and The New York Times. Dr. Goldfarb earned his BA from Tel Aviv University in 1996 and his PhD in economics from Stanford University in 2002.

David Kirsch

David Kirsch is the dean's term associate professor of capitalism studies at the Robert H. Smith School of Business at the University of Maryland. His research focuses on the intersection of problems of innovation and entrepreneurship, technological and business failure, and industry emergence and evolution. His work has appeared in Technology and Culture, Business History Review, Journal of Financial Economics, and Strategic Management Journal. Dr. Kirsch received his PhD in the history of technology from Stanford University, an MA in the economics of technological change from MERIT at the University of Limburg (Netherlands), and an AB from Harvard College in history and science magna cum laude.

April Shen

April Shen is a doctoral student in strategic management at the Robert H. Smith School of Business at the University of Maryland, College Park.

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