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Are capital markets the only friend of innovation?

November 7, 2014

Post by Barcelona GSE alum Marco Antonielli ’12 (Master in International Trade, Finance and Development)

Marco Antonielli

While Twitter grew through venture capital, other innovative firms might profit from better credit – by Marco Antonielli and Carlo Altomonte

[this article firstly appeared on the Bruegel blog]

Intangible assets are the key to growth in the knowledge economy, but innovative entrepreneurs can find it hard to secure the financing to kick-start their projects. The role of capital and credit markets in procuring funds for innovation is therefore crucial. Twitter is a case in point: financial support offered by early seed investors and venture capitalists in its first years permitted young entrepreneurs to grow a company around the simple idea of a microblogging platform. Started in 2006, after only seven years the microblogging platform went public last November. This is all the more impressive given that Twitter’s most valuable assets are not buildings or equipment, but patents and software or even more ethereal resources such as the interface design…

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