IDEAS home Printed from https://ideas.repec.org/a/taf/veecee/v21y2019i1p35-50.html
   My bibliography  Save this article

Unicorns, Cheshire cats, and the new dilemmas of entrepreneurial finance

Author

Listed:
  • Martin Kenney
  • John Zysman

Abstract

This essay examines the implications of the evolving environment for the formation and financing of new firms in the United States. After the dot.com crash of 2000, there was a regime change in new firm formation and the number of firms that exited through an initial public stock offering. This change was made possible by the decreased cost, increased speed, and ease of market entry due to availability of open source software, digital platforms, and cloud computing. This facilitated a proliferation of startups seeking to disrupt incumbent firms in a wide variety of business sectors. The contemporaneous growth in the number and size of private funding sources has resulted in a situation within which new firms can afford to run massive losses for long periods in an effort to dislodge incumbents or attempt to triumph over other lavishly funded startups. This has triggered remarkable turmoil in many formerly stable industrial sectors, as the new entrants fueled by capital investments undercut incumbents on price and service. The ultimate result is that new entrants with access to massive amounts of capital can survive losses for a sufficiently long period to displace existing firms and, thereby, transform earlier industrial ecosystems.

Suggested Citation

  • Martin Kenney & John Zysman, 2019. "Unicorns, Cheshire cats, and the new dilemmas of entrepreneurial finance," Venture Capital, Taylor & Francis Journals, vol. 21(1), pages 35-50, January.
    • Handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:35-50
    DOI: 10.1080/13691066.2018.1517430
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/13691066.2018.1517430
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13691066.2018.1517430?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Petra Kinga Kézai & Attila Kurucz, 2023. "Crisis Resilience of Startup Companies (The Case of Hungary among the Visegrad Countries with a Focus on the Pandemic)," Sustainability, MDPI, vol. 15(9), pages 1-25, April.
    2. Robert Dobre & Daniel Bulin & Maria-Cristina Iorgulescu & Iulia Monica Oehler-Sincai & Olimpia State, 2020. "Artificial Intelligence Sector: The Next Technology Bubble? A Comparative Analysis with Dotcom Based on Stock Market Data," Romanian Economic Journal, Department of International Business and Economics from the Academy of Economic Studies Bucharest, vol. 22(76), pages 24-37, June.
    3. Burström, Thommie & Lahti, Tom & Parida, Vinit & Wartiovaara, Markus & Wincent, Joakim, 2023. "A definition, review, and extension of global ecosystems theory: Trends, architecture and orchestration of global VCs and mechanisms behind unicorns," Journal of Business Research, Elsevier, vol. 157(C).
    4. Murray, Gordon, 2020. "Ten Meditations on (Public) Venture Capital – Revisited," MPRA Paper 104389, University Library of Munich, Germany.
    5. Adrian Mallory & Anna Mdee & Dorice Agol & Leonie Hyde‐Smith & Domenic Kiogora & Joy Riungu & Alison Parker, 2022. "The potential for scaling up container‐based sanitation in informal settlements in Kenya," Journal of International Development, John Wiley & Sons, Ltd., vol. 34(7), pages 1347-1361, October.
    6. Ana Paula Zanetti Neves & Silvia Novaes Zilber & Evandro Luiz Lopes, 2024. "The Power of Big Data Analytics for the Competitive Performance of Digital Startups in an Emerging Economy," International Journal of Business and Management, Canadian Center of Science and Education, vol. 19(5), pages 254-254, September.
    7. Neely, Megan Tobias & Carmichael, Donna, 2021. "Profiting on crisis: how predatory financial investors have worsened inequality in the coronavirus crisis," LSE Research Online Documents on Economics 112697, London School of Economics and Political Science, LSE Library.
    8. Yana S. Matkovskaya & Elena Vechkinzova & Valeriy Biryukov, 2022. "Banking Ecosystems: Identification Latent Innovation Opportunities Increasing Their Long-Term Competitiveness Based on a Model the Technological Increment," JOItmC, MDPI, vol. 8(3), pages 1-33, August.
    9. Somaya, Deepak & You, Jingya, 2024. "Scalability, venture capital availability, and unicorns: Evidence from the valuation and timing of IPOs," Journal of Business Venturing, Elsevier, vol. 39(1).
    10. Carolin Bock & Christian Hackober, 2020. "Unicorns—what drives multibillion-dollar valuations?," Business Research, Springer;German Academic Association for Business Research, vol. 13(3), pages 949-984, November.
    11. Heeks, Richard & Gomez-Morantes, Juan Erasmo & Graham, Mark & Howson, Kelle & Mungai, Paul & Nicholson, Brian & Van Belle, Jean-Paul, 2021. "Digital platforms and institutional voids in developing countries: The case of ride-hailing markets," World Development, Elsevier, vol. 145(C).
    12. Audretsch, David B. & Belitski, Maksim & Chowdhury, Farzana & Desai, Sameeksha, 2024. "Regulating entrepreneurship quality and quantity," Research Policy, Elsevier, vol. 53(2).
    13. Lada Vejmelkova, 2023. "Characteristics Of Informal Venture Capital In The Czech Republic: Quantitative Approach," Economic Thought and Practice, Department of Economics and Business, University of Dubrovnik, vol. 32(1), pages 19-51, june.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:veecee:v:21:y:2019:i:1:p:35-50. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/TVEC20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.