Financing of Entrepreneurial Ventures

Abstract

Entrepreneurs with zero startup capital can launch new ventures through kind-financing from input-suppliers by offering higher input-prices at time t+k; and, through kind offering at lower prices at time t+k to output-buyers who make advance payments at time t. Interests of entrepreneurs, input-suppliers, and output-buyers get intertwined through such arrangements. All parties (entrepreneurs, input-suppliers and output-buyers) joined through kind-financing, kind-offering, and advance-payments have vested interests in the success of the new-venture (and they contribute through their expertise). This improves efficiency thereby generating a higher level of output than the one generated under cash financing and spot-selling. The value of outputs generated through kind-financing will be greater than the value of outputs owed to kind-suppliers; and, the quantity of outputs generated through advance-payments will be greater than the quantity of outputs owed to advance payers. All types of ventures (new-ventures, growing-ventures, and advanced ventures) gain through kind-financing and forward-selling.