Ramana Nanda

Associate Professor of Business Administration

Unit: Entrepreneurial Management


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Ramana Nanda is an Associate Professor of Business Administration in the Entrepreneurial Management unit at Harvard Business School.  He teaches Entrepreneurial Finance in the second year of the MBA program and in HBS executive education offerings.

Ramana's research focuses on understanding the drivers of financing constraints for startups and on the ways in which the structure of the financial sector impacts innovation and entrepreneurship in the economy.  One strand of research has looked at debt financing for small businesses.  This work has examined how the availability and the cost of personal debt, such as home equity loans, as well as how the structure of the commercial banking sector, has shaped the entry and growth of small businesses.  A second strand examines the financing of innovation and the commercialization of new technologies. This work has studied how constraints to experimentation by venture capital and angel investors across industries, regions or time impact the rate and trajectory of innovation by startup ventures.   

Ramana is a Faculty Research Fellow in the Productivity, Innovation and Entrepreneurship Program at the NBER, and a Faculty Affiliate at the SME Initiative of Innovations for Poverty Action.  At Harvard University, he is a Faculty Affiliate of both the Center for International Development and the Center for the Environment.  He received his Ph.D. from MIT's Sloan School of Management and has a BA and MA in Economics from Trinity College, Cambridge, U.K. He is a recipient of the 2010 Kauffman Junior Faculty Fellowship in Entrepreneurship Research and the 2015 Kauffman Prize Medal, that is awarded annually to one scholar under age 40 whose research has made a significant contribution to the literature in entrepreneurship.

Prior to starting his Ph.D., Ramana was based in the London and New York offices of Oliver, Wyman & Company, where he worked primarily with clients in global capital markets as well as in small-business banking.  He continues to advise startup ventures on their financing strategies, with a focus on fintech, biotech, cleantech.  He also works with philanthropic investors who use market-based solutions to address poverty and promote entrepreneurship in developing countries.


Journal Articles

  1. Financing Risk and Innovation

    Ramana Nanda and Matthew Rhodes-Kropf

    We provide a model of investment into new ventures that demonstrates why some places, times, and industries should be associated with a greater degree of experimentation by investors. Investors respond to financing risk―a forecast of limited future funding―by modifying their focus to finance less innovative firms. Potential shocks to the supply of capital create the need for increased upfront financing, but this protection lowers the real option value of the new venture. In equilibrium, financing risk disproportionately impacts innovative ventures with the greatest real option value. We propose that extremely novel technologies may need "hot" financial markets to get through the initial period of discovery or diffusion.

    Keywords: Risk and Uncertainty; Financing and Loans; Innovation and Invention;


    Nanda, Ramana, and Matthew Rhodes-Kropf. "Financing Risk and Innovation." Management Science (forthcoming). View Details
  2. Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts

    Ethan Mollick and Ramana Nanda

    In fields as diverse as technology entrepreneurship and the arts, crowds of interested stakeholders are increasingly responsible for deciding which innovations to fund, a privilege that was previously reserved for a few experts, such as venture capitalists and grant‐making bodies. Little is known about the degree to which the crowd differs from experts in judging which ideas to fund, and, indeed, whether the crowd is even rational in making funding decisions. Drawing on a panel of national experts and comprehensive data from the largest crowdfunding site, we examine funding decisions for proposed theater projects, a category where expert and crowd preferences might be expected to differ greatly. We instead find significant agreement between the funding decisions of crowds and experts. Where crowds and experts disagree, it is far more likely to be a case where the crowd is willing to fund projects that experts may not. Examining the outcomes of these projects, we find no quantitative or qualitative differences between projects funded by the crowd alone, and those that were selected by both the crowd and experts. Our findings suggest that crowdfunding can play an important role in complementing expert decisions, particularly in sectors where the crowds are end users, by allowing projects the option to receive multiple evaluations and thereby lowering the incidence of "false negatives."

    Keywords: Decision Choices and Conditions; Entrepreneurship; Investment; Fine Arts Industry; Technology Industry;


    Mollick, Ethan, and Ramana Nanda. "Wisdom or Madness? Comparing Crowds with Expert Evaluation in Funding the Arts." Management Science (forthcoming). View Details
  3. Did Bank Distress Stifle Innovation During the Great Depression?

    Ramana Nanda and Tom Nicholas

    We find a negative relationship between bank distress and the level, quality, and trajectory of firm-level innovation during the Great Depression, particularly for R&D firms operating in capital intensive industries. However, we also show that because a sufficient number of R&D intensive firms were located in counties with lower levels of bank distress, or were operating in less capital intensive industries, the negative effects were mitigated in aggregate. Although Depression era bank distress was associated with the stifling of innovation, our results also help to explain why technological development was still robust following one of the largest shocks in the history of the U.S. banking system.

    Keywords: Great Depression; patents; R&D; Bank Distress; Patents; Research and Development; Financial Crisis; Banks and Banking; Innovation and Invention; Banking Industry; United States;


    Nanda, Ramana, and Tom Nicholas. "Did Bank Distress Stifle Innovation During the Great Depression?" Journal of Financial Economics 114, no. 2 (November 2014): 273–292. View Details
  4. Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics

    Thomas Astebro, Holger Herz, Ramana Nanda and Roberto A. Weber

    There is a growing body of evidence that many entrepreneurs seem to enter and persist in entrepreneurship despite earning low risk-adjusted returns. This has lead to attempts to provide explanations—using both standard economic theory and behavioral economics—for why certain individuals may be attracted to such an apparently unprofitable activity. Drawing on research in behavioral economics, in the sections that follow, we review three sets of possible interpretations for understanding the empirical facts related to the entry into, and persistence in, entrepreneurship. Differences in risk aversion provide a plausible and intuitive interpretation of entrepreneurial activity. In addition, a growing literature has begun to highlight the potential importance of overconfidence in driving entrepreneurial outcomes. Such a mechanism may appear at face value to work like a lower level of risk aversion, but there are clear conceptual differences—in particular, overconfidence likely arises from behavioral biases and misperceptions of probability distributions. Finally, nonpecuniary taste-based factors may be important in motivating both the decisions to enter into and to persist in entrepreneurship.


    Astebro, Thomas, Holger Herz, Ramana Nanda, and Roberto A. Weber. "Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics." Journal of Economic Perspectives 28, no. 3 (Summer 2014): 49–70. View Details
  5. Entrepreneurship as Experimentation

    William R. Kerr, Ramana Nanda and Matthew Rhodes-Kropf

    Entrepreneurship research is on the rise, but many questions about its fundamental nature still exist. We argue that entrepreneurship is about experimentation: the probabilities of success are low, extremely skewed, and unknowable until an investment is made. At a macro level, experimentation by new firms underlies the Schumpeterian notion of creative destruction. However, at a micro level, investment and continuation decisions are not always made in a competitive Darwinian contest. Instead, a few investors make decisions that are impacted by incentive, agency, and coordination problems, often before a new idea even has a chance to compete in a market. We contend that costs and constraints on the ability to experiment alter the type of organizational form surrounding innovation and influence when innovation is more likely to occur. These factors not only govern how much experimentation is undertaken in the economy, but also the trajectory of experimentation, with potentially very deep economic consequences.

    Keywords: Entrepreneurship; Innovation and Invention;


    Kerr, William R., Ramana Nanda, and Matthew Rhodes-Kropf. "Entrepreneurship as Experimentation." Journal of Economic Perspectives 28, no. 3 (Summer 2014): 25–48. View Details
  6. Investment Cycles and Startup Innovation

    Ramana Nanda and Matthew Rhodes-Kropf

    We find that VC-backed firms receiving their initial investment in hot markets are more likely to go bankrupt, but conditional on going public are valued higher on the day of their IPO, have more patents, and have more citations to their patents. Our results suggest that VCs invest in riskier and more innovative startups in hot markets (rather than just worse firms). This is true even for the most experienced VCs. Furthermore, our results suggest that the flood of capital in hot markets also plays a causal role in shifting investments to more novel startups—by lowering the cost of experimentation for early stage investors and allowing them to make riskier, and more novel, investments.

    Keywords: venture capital; innovation; Market Cycles; Financing Risk; Risk and Uncertainty; Venture Capital; Investment; Innovation and Invention;


    Nanda, Ramana, and Matthew Rhodes-Kropf. "Investment Cycles and Startup Innovation." Journal of Financial Economics 110, no. 2 (November 2013): 403–418. View Details
  7. A Darker Side to Decentralized Banks: Market Power and Credit Rationing in SME Lending

    Rodrigo Canales and Ramana Nanda

    We use loan-level data to study how the organizational structure of banks impacts small business lending. We find that decentralized banks-where branch managers have greater autonomy over lending decisions-give larger loans to small firms and those with "soft information." However, decentralized banks are also more responsive to their own competitive environment. They are more likely to expand credit when faced with competition but also cherry pick customers and restrict credit when they have market power. This "darker side" to decentralized banks in concentrated markets highlights that the level of local banking competition is key to determining which organizational structure provides better lending terms for small businesses.

    Keywords: Geographic Location; Customers; Financing and Loans; Credit; Organizational Structure; Banks and Banking; Governance Compliance; Competitive Strategy;


    Canales, Rodrigo, and Ramana Nanda. "A Darker Side to Decentralized Banks: Market Power and Credit Rationing in SME Lending." Journal of Financial Economics 105, no. 2 (August 2012): 353–366. View Details
  8. Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry

    Ramana Nanda and Tarun Khanna

    This study explores the importance of cross-border social networks for entrepreneurs in developing countries by examining ties between the Indian expatriate community and local entrepreneurs in India's software industry. We find that local entrepreneurs who have previously lived outside India rely significantly more on diaspora networks for business leads and financing. This is especially true for entrepreneurs who are based outside software hubs—where getting leads to new businesses and accessing finance is more difficult. Our results provide micro-evidence consistent with a view that cross-border social networks play an important role in helping entrepreneurs to circumvent the barriers arising from imperfect domestic institutions in developing countries.

    Keywords: Diasporas; Entrepreneurship; Software; Information Technology Industry; India;


    Nanda, Ramana, and Tarun Khanna. "Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry." Journal of Economics & Management Strategy 19, no. 4 (Winter 2010): 991–1012. View Details
  9. Workplace Peers and Entrepreneurship

    Ramana Nanda and Jesper B. Sorensen

    We examine whether the likelihood of entrepreneurial activity is related to the prior career experiences of an individual's co-workers, using a unique matched employer-employee panel dataset. We argue that coworkers can increase the likelihood that an individual will perceive entrepreneurial opportunities as well as increase his or her motivation to pursue those opportunities. We find that an individual is more likely to become an entrepreneur if his or her co-workers have been entrepreneurs before. Peer influences also appear to be substitutes for other sources of entrepreneurial influence: we find that peer influences are strongest for those who have less exposure to entrepreneurship in other aspects of their lives.

    Keywords: Entrepreneurship; Personal Development and Career; Perception; Opportunities; Motivation and Incentives; Power and Influence;


    Nanda, Ramana, and Jesper B. Sorensen. "Workplace Peers and Entrepreneurship." Management Science 56, no. 7 (July 2010): 1116–1126. View Details
  10. Banking Deregulations, Financing Constraints and Firm Entry Size

    William R. Kerr and Ramana Nanda

    We examine the effect of US branch banking deregulations on the entry size of new firms using micro-data from the US Census Bureau. We find that the average entry size for startups did not change following the deregulations. However, among firms that survived at least four years, a greater proportion of firms entered either at their maximum size or closer to the maximum size in the first year. The magnitude of these effects were small compared to the much larger changes in entry rates of small firms following the reforms. Our results highlight that this large-scale entry at the extensive margin can obscure the more subtle intensive margin effects of changes in financing constraints.

    Keywords: Business Startups; Financing and Loans; Governing Rules, Regulations, and Reforms; Market Entry and Exit; Banking Industry; United States;


    Kerr, William R., and Ramana Nanda. "Banking Deregulations, Financing Constraints and Firm Entry Size." Journal of the European Economic Association 8, nos. 2-3 (April–May 2010): 582–593. View Details
  11. Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship

    William R. Kerr and Ramana Nanda

    We examine entrepreneurship and creative destruction following US banking deregulations using Census Bureau data. US banking reforms brought about exceptional growth in both entrepreneurship and business closures. Most of the closures, however, were the new ventures themselves. Although we do find evidence for the standard story of creative destruction, the most pronounced impact was a massive increase in churning among new entrants. We argue that creative destruction requires many business failures along with the few great successes. The successes are very difficult to identify ex ante, which is why democratizing entry is an important trait of well-functioning capital markets.

    Keywords: Entrepreneurship; Governing Rules, Regulations, and Reforms; Market Entry and Exit; Capital Markets; Banks and Banking; Growth and Development; Disruptive Innovation;


    Kerr, William R., and Ramana Nanda. "Democratizing Entry: Banking Deregulations, Financing Constraints, and Entrepreneurship." Journal of Financial Economics 94, no. 1 (October 2009): 124–149. View Details

Edited Volumes

  1. Financing Entrepreneurial Experimentation

    Ramana Nanda and Matthew Rhodes-Kropf

    Keywords: innovation; venture capital; Investing; abandonment option; failure tolerance; Risk and Uncertainty; Technological Innovation; Venture Capital; Entrepreneurship;


    Nanda, Ramana, and Matthew Rhodes-Kropf. "Financing Entrepreneurial Experimentation." Chap. 1 in Innovation Policy and the Economy, Volume 16, edited by Josh Lerner and Scott Stern. National Bureau of Economic Research, and University of Chicago Press, forthcoming. View Details
  2. Financing Innovation

    William R. Kerr and Ramana Nanda

    We review the recent literature on the financing of innovation, inclusive of large companies and new startups. This research strand has been very active over the past five years, generating important new findings, questioning some long-held beliefs, and creating its own puzzles. Our review outlines the growing body of work that documents a role for debt financing related to innovation. We highlight the new literature on learning and experimentation across multi-stage innovation projects and how this impacts optimal financing design. We further highlight the strong interaction between financing choices for innovation and changing external conditions, especially reduced experimentation costs.

    Keywords: Entrepreneurship; Borrowing and Debt; Innovation and Invention;


    Kerr, William R., and Ramana Nanda. "Financing Innovation." Annual Review of Financial Economics 7 (November 2015): 445–462. View Details
  3. Innovation and Entrepreneurship in Renewable Energy

    Ramana Nanda, Ken Younge and Lee Fleming

    We document three facts related to innovation and entrepreneurship in renewable energy. Using data from the U.S. Patent and Trademark Office, we first show that patenting in renewable energy remains highly concentrated in a few large energy firms. In 2009, the top 20 firms accounted for over 40% of renewable energy patents in our data. Second, we compare patenting by venture-backed startups and incumbent firms. Using a variety of measures, we find that VC-backed startups are engaged in more novel and more highly cited innovations, compared to incumbent firms. Incumbent firms also have a higher share of patents that are completely un-cited or self-cited, suggesting that incumbents are more likely to engage in incremental innovation compared to VC-backed startups. Third, we document a rising share of patenting by startups that coincided with the surge in venture capital finance for renewable energy technologies in the early 2000s. We also point to structural factors about renewable energy that have caused the availability of venture capital finance for renewable energy to fall dramatically in recent years, with potential implications for the rate and trajectory of innovation in this sector.

    Keywords: entrepreneurial finance; energy; entrepreneurial management; Energy; Finance; Entrepreneurship; Energy Industry;


    Nanda, Ramana, Ken Younge, and Lee Fleming. "Innovation and Entrepreneurship in Renewable Energy." Chap. 7 in The Changing Frontier: Rethinking Science and Innovation Policy, edited by Adam Jaffe and Benjamin Jones, 199–232. University of Chicago Press, 2015. View Details
  4. Financing Constraints and Entrepreneurship

    William R. Kerr and Ramana Nanda

    Financing constraints are one of the biggest concerns impacting potential entrepreneurs around the world. Given the important role that entrepreneurship is believed to play in the process of economic growth, alleviating financing constraints for would-be entrepreneurs is also an important goal for policymakers worldwide. We review two major streams of research examining the relevance of financing constraints for entrepreneurship. We then introduce a framework that provides a unified perspective on these research streams, thereby highlighting some important areas for future research and policy analysis in entrepreneurial finance.

    Keywords: Economic Growth; Entrepreneurship; Financing and Loans; Investment; Policy; Research;


    Kerr, William R., and Ramana Nanda. "Financing Constraints and Entrepreneurship." In Handbook of Research on Innovation and Entrepreneurship, edited by David Audretsch, Oliver Falck, and Stephan Heblich, 88–103. Cheltenham, U.K.: Edward Elgar Publishing, 2011. (NBER WP 15498, HBS WP 10-013.) View Details

Policy Reports and Practitioner-Orientated Publications

  1. Stretch the Mission? A Nonprofit That Supports Emerging-market Entrepreneurs Considers Expanding to the U.S.

    William A. Sahlman and Ramana Nanda

    A case study is presented concerning a nonprofit organization that helps entrepreneurs in emerging-markets countries in regions including Latin America and Asia, focusing on the decision over whether to expand its services into the Miami, Florida, area, a question on which the two co-founders of the organization disagree. It presents perspectives on the case from nonprofit executive Linda Rottenberg and entrepreneur Gururaj "Desh" Deshpande.


    Sahlman, William A., and Ramana Nanda. "Stretch the Mission? A Nonprofit That Supports Emerging-market Entrepreneurs Considers Expanding to the U.S." Harvard Business Review 93, no. 5 (May 2015): 113–117. View Details
  2. Small and Medium Firm Lending in Mexico: Lessons and Current Issues

    Rodrigo Canales and Ramana Nanda

    Mexico is often cited as one of the world's most entrepreneurial countries in terms of the percentage of its population that has started or is in the process of starting a business venture. Yet Mexico does not seem to be very friendly to entrepreneurs, as confirmed by the fact that a large portion of new businesses is created in the informal sector. The authors identify the main obstacle to this area as the country's insufficient access to credit for small entrepreneurs. The chapter is devoted to assessing recent programs adopted in Mexico to foster SME competitiveness (including programs to increase capital availability) and draws some important conclusions for policymakers in their efforts to improve the micro-components of national competitiveness.

    Keywords: Business Startups; Entrepreneurship; Policy; Competition; Mexico;


    Canales, Rodrigo, and Ramana Nanda. "Small and Medium Firm Lending in Mexico: Lessons and Current Issues." In The Mexico Competitiveness Report 2009, edited by Ricardo Hausmann, Emilio Austin, and Irene Mia. World Economic Forum, 2009. View Details

Working Papers

  1. Cost of Experimentation and the Evolution of Venture Capital

    Michael Ewens, Ramana Nanda and Matthew Rhodes-Kropf

    We study adaptation by financial intermediaries as a response to technological change in the context of venture capital finance. Using a theoretical model and rich data, we are able to both document and provide a framework to understand the changes in the investment strategy of VCs in recent years—an increased prevalence of investors who "spray and pray"—providing a little funding and limited governance to an increased number of startups that they are more likely to abandon, but where early experiments significantly inform beliefs about the future potential of the venture. We also highlight how this adaptation by financial intermediaries has altered the trajectory of aggregate innovation away from complex technologies where initial experiments cost more towards those where information on future prospects is revealed quickly and cheaply.

    Keywords: innovation; venture capital; Investing; abandonment option; failure tolerance; Technological Innovation; Venture Capital; Entrepreneurship; Investment;


    Ewens, Michael, Ramana Nanda, and Matthew Rhodes-Kropf. "Cost of Experimentation and the Evolution of Venture Capital." Harvard Business School Working Paper, No. 15-070, February 2015. (Revised October 2015.) View Details
  2. House Money and Entrepreneurship

    Sari Pekkala Kerr, William R. Kerr and Ramana Nanda

    We examine the relationship between house prices and entrepreneurship using micro data from the US Census Bureau. Increases in house prices are often thought to drive entrepreneurship through unlocking the collateral channel for bank loans, but this interpretation is challenged by worries regarding omitted variable biases (e.g., rising local demand) or wealth effects (i.e., that people with more valuable homes are more likely to enter entrepreneurship for reasons other than access to collateral). We construct an empirical environment that utilizes very localized price changes, exploits variations in initial home values across residents in the same zip code, and embeds multiple comparisons (e.g., owners vs. renters, homestead exemption laws by state). For the United States during the 2000-2004 period, the link of home prices to the rate of entrepreneurship through home equity channels is modest in economic magnitude. This is despite a focus on a time period that experienced the largest concentration of US home price growth over the last two decades. Even when we do connect home equity to entrepreneurship, part of the effect is linked to an increased demand for entrepreneurship. While housing collateral plays a role in the entry that we observe, it does not seem to be a major barrier to entrepreneurship in our context.

    Keywords: house prices; mortgages; collateral channel; entrepreneurship; entry; Demography; Mortgages; Entrepreneurship;


    Kerr, Sari Pekkala, William R. Kerr, and Ramana Nanda. "House Money and Entrepreneurship." Harvard Business School Working Paper, No. 15-069, February 2015. (Revised July 2015.) View Details
  3. Financial Development and Technology Diffusion

    Diego Comin and Ramana Nanda

    We examine the extent to which financial market development impacts the diffusion of 16 major technologies, looking across 55 countries, from 1870 to 2000. We find that greater depth in financial markets leads to faster technology diffusion for more capital-intensive technologies, but only in periods closer to the invention of the technology. In fact, we find no differential effect of financial depth on the diffusion of capital-intensive technologies in the late stages of diffusion or in late adopters. Our results are consistent with a view that local financial markets play a critical role in facilitating the process of experimentation that is required for the initial commercialization of technologies. This evidence also points to an important mechanism relating financial market development to technology diffusion and economic growth.

    Keywords: Technology; Commercialization; Financial Markets;


    Comin, Diego, and Ramana Nanda. "Financial Development and Technology Diffusion." Harvard Business School Working Paper, No. 15-036, November 2014. View Details
  4. Home Equity Finance and Entrepreneurial Performance—Evidence from a Mortgage Reform

    Thais Laerkholm Jensen, Søren Leth-Petersen and Ramana Nanda

    We study how a mortgage reform that enabled home equity–based borrowing had an impact on entrepreneurship, using individual- and firm-level micro data from Denmark. The reform allowed entrepreneurs to bypass the project screening function of banks, by instead relying on the value of housing collateral to access credit. This enables us to study the efficacy of banks' screening technologies by examining the quality of the marginal entrants who benefited from reform. As expected, the reform relaxed constraints and led to an increase in entrepreneurship through the collateral channel. However, on average, new entrants were more likely to start businesses in sectors where they had no prior experience, were more likely to fail, and had lower performance than those who did not benefit from the reform. Our results provide evidence that despite asymmetric information and opacity in startup lending, banks' screening can play an important role in credit allocation to more promising entrepreneurs. In such instances, the marginal individuals selecting into entrepreneurship when they can bypass bank screening will tend to start businesses that are of lower quality than the average existing businesses, leading to an increase in churning entry that may not translate into an equivalent increase in the overall level of entrepreneurship.

    Keywords: Entrepreneurship; Mortgages;


    Jensen, Thais Laerkholm, Søren Leth-Petersen, and Ramana Nanda. "Home Equity Finance and Entrepreneurial Performance—Evidence from a Mortgage Reform." Harvard Business School Working Paper, No. 15-020, October 2014. (Revised September 2015.) View Details
  5. Innovation and the Financial Guillotine

    Ramana Nanda and Matthew Rhodes-Kropf

    We examine how investors' tolerance for failure impacts the types of projects they are willing to fund. We show that actions that reduce short-term accountability and thus encourage agents to experiment more simultaneously reduce the level of experimentation financial backers are willing to fund. Failure tolerance has an equilibrium price that increases in the level of experimentation. More experimental projects that don't generate enough to pay the price cannot be started. In fact, an endogenous equilibrium can arise in which all competing financiers choose to be failure tolerant in the attempt to attract entrepreneurs, leaving no capital to fund the most radical, experimental projects in the economy. The tradeoff between failure tolerance and a sharp guillotine help explain when and where radical innovation occurs.

    Keywords: innovation; venture capital; Investing; abandonment option; failure tolerance; Venture Capital; Attitudes; Investment; Failure; Innovation and Invention;


    Nanda, Ramana, and Matthew Rhodes-Kropf. "Innovation and the Financial Guillotine." Harvard Business School Working Paper, No. 13-038, October 2012. (Revised November 2012.) View Details
  6. Entrepreneurship and the Discipline of External Finance

    Ramana Nanda

    I confirm the finding that the propensity to start a new firm rises sharply among those in the top five percentiles of personal wealth. This pattern is more pronounced for entrants in less capital intensive sectors. Prior to entry, founders in this group earn about 6% less compared to those who stay in paid employment. Their firms are more likely to fail early and conditional on survival, less likely to be make money. This pattern is only true for the most-wealthy individuals, and is attenuated for wealthy individuals starting firms in capital intensive industries. Taken together, these findings suggest that the spike in entry at the top end of the wealth distribution is driven by low-ability individuals who can afford to start (and sometimes continue running) weaker firms because they do not face the discipline of external finance.

    Keywords: Business Startups; Competency and Skills; Entrepreneurship; Financing and Loans; Personal Finance; Wealth;


    Nanda, Ramana. "Entrepreneurship and the Discipline of External Finance." Harvard Business School Working Paper, No. 11-098, March 2011. View Details
  7. Cost of External Finance and Selection into Entrepreneurship

    Ramana Nanda

    This paper examines the extent to which the positive relationship between personal wealth and entry into entrepreneurship is due to financing constraints. I exploit a tax reform and use unique micro-data from Denmark to study how exogenous changes in the cost of external finance shape both the probability of entering entrepreneurship and the characteristics of those who become entrepreneurs. As expected, differences-in-differences estimates show that the entry rates for individuals who faced an increase in the cost of finance fell by 40% relative to those whose cost of external finance was unchanged. However, while some of the fall in entry was due to less wealthy individuals with high human capital (confirming the presence of financing constraints), the greatest relative decline in entry came from individuals with lower human capital, many of whom were above median wealth. This finding suggests that an important part of the positive relationship between personal wealth and entrepreneurship may be driven by the fact that wealthy individuals with lower ability can start new businesses because they are less likely to face the disciplining effect of external finance.

    Keywords: Business Startups; Entrepreneurship; Cost; Financing and Loans; Personal Finance; Human Capital; Wealth; Denmark;


    Nanda, Ramana. "Cost of External Finance and Selection into Entrepreneurship." Harvard Business School Working Paper, No. 08-047, January 2008. View Details

Cases and Teaching Notes

  1. Founder Field Day

    Matthew Rhodes-Kropf, Ramana Nanda and Nathaniel Burbank

    Branded as the "Millennial firm for Millennials," Mike Rothenberg founded Rothenberg Ventures (RV) in 2012 while earning his MBA at the Harvard Business School (HBS). Over the following 24 months, Rothenberg raised $20 million and built a venture capital firm that made dozens of seed investments in technology-focused startups. Pitched as an event that could pack a year's worth of networking into a single day, Founder Field Day was perhaps the firm's largest bet to date. On a spring day in May 2014, as some 300 invited founders descended on AT&T Park in San Francisco, one attendee, Fran Hauser, had a much larger decision to make than just selecting which sessions to attend in the day's 7th and 8th "innings." Rothenberg had recently asked Hauser to join RV as a partner and investor and invited her out to the Bay Area to consider the offer. Hauser, who had left her role as the president of digital for Time Inc.'s Style & Entertainment Group three months earlier, wondered if Rothenberg's inexperience would prove to be a drawback or a strength.

    Keywords: finance; venture capital; Startups; seed-investing; micro-VC; Venture Capital; Business Startups; San Francisco; New York (city, NY);


    Rhodes-Kropf, Matthew, Ramana Nanda, and Nathaniel Burbank. "Founder Field Day." Harvard Business School Case 815-101, February 2015. View Details
  2. Fast Ion Battery

    Ramana Nanda, Robert F. White and Stephanie Puzio

    John Davidson, a partner at Ware Street Capital (WSC) and a board member at Fast Ion Battery, had just received a phone call from Don Lerner at Bluelock Ventures telling him that Bluelock would not participate in the $5M bridge financing for Fast Ion Battery. Lerner's call could not have come at a worse time. Fast Ion was running out of cash and needed another round of financing urgently to continue developing its revolutionary battery.
    Davidson faced a real dilemma. On the one hand, the company was finally gaining traction with developing its technology and the search to replace the current CEO had yielded two prospective candidates who were extremely well-suited to drive the company forward with a more capital efficient business model. On the other hand, Ware Street Capital and the two other investors had already invested $10 million into a company that had not performed up to investors' expectations. Would they be throwing more good money after bad by providing the bridge financing? Moreover, would other, later stage, investors be willing to provide the significant amounts of capital required to get the company to an exit event given the changing climate for clean tech investments?
    These questions became more pressing following Lerner's call that Bluelock had chosen not to continue backing Fast Ion. Was Fast Ion Battery worth saving?

    Keywords: venture capital; entrepreneurial finance; real options; term sheets; Clean Technology; Entrepreneurship; Venture Capital;


    Nanda, Ramana, Robert F. White, and Stephanie Puzio. "Fast Ion Battery." Harvard Business School Case 815-025, September 2014. (Revised March 2015.) View Details
  3. Oasys Water: Balancing Strategic Partnerships & Financing Decisions

    Ramana Nanda, William A. Sahlman and Sid Misra

    Oasys Water had developed a proprietary water treatment technology based on an innovative forward osmosis process that could remove dissolved solids from water more effectively and efficiently than existing technologies. As Oasys looked to scale, it was exploring partnerships with various incumbent firms—the most serious were with a set of international oil and gas production companies (IOCs); a global oil and gas (O&G) services provider called National Oilwell Varco (NOV); and Woteer, a Chinese EPC company specializing in industrial water and wastewater systems.
    Woteer had expressed an interest in gaining exclusive access to Oasys' forward osmosis technology for water treatment applications in China in exchange for an equity investment. Jim Matheson, President and CEO, did not have the luxury of choosing a partner solely on the merits of its strategic value to Oasys. He was forced to evaluate the strategic benefit alongside the likelihood of actually closing a deal, the specific terms of each deal, and especially the speed with which a deal could be closed, given Oasys' pressing financing needs. Should he do a deal with Woteer, and if so, on what terms?

    Keywords: entrepreneurial finance; entrepreneurship; finance; strategy; Entrepreneurship; China;


    Nanda, Ramana, William A. Sahlman, and Sid Misra. "Oasys Water: Balancing Strategic Partnerships & Financing Decisions." Harvard Business School Case 815-076, November 2014. View Details
  4. AngelList

    Ramana Nanda and Liz Kind

    In early 2010, Naval Ravikant and Babak Nivi posted a list of angel investors on the Venture Hacks blog as a resource for founders looking for funding prior to seeking venture capital. The list quickly evolved into AngelList, a separate matchmaking platform for founders and investors to make early stage fundraising more efficient. By June 2013, AngelList had garnered substantial media attention, and was used by many high profile angel investors and venture capitalists. It had approximately 100,000 startups and 18,000 accredited investors. Since the site was launched, almost 40 startups on AngelList had been acquired, and over 2,000 startups had been funded. For most entrepreneurs, posting a profile on AngelList had become as commonplace as setting up a personal profile on Facebook or LinkedIn. Most recently, the site added Invest Online, a new product that in partnership with SecondMarket, allowed accredited investors to make small investments—as low as $1,000—in startups at the same terms as larger investors.

    While the co-founders were proud of AngelList's growth, as of June 2013, they were not charging for its use and had not yet determined its business model. Ravikant and Nivi wondered if they should reconsider and have AngelList apply for broker dealer status so it could charge transaction fees, but they were reluctant to enter what they considered a regulatory minefield. The recently passed JOBS Act was expected to relax constraints around crowdfunding, and Nivi and Ravikant knew that would be a logical extension for AngelList as well. Finally, they wondered if they should avoid any potential regulatory issues altogether and instead focus on generating revenue primarily from recruiting and other ancillary services.

    Keywords: angel investors; finance; venture capital; entrepreneurial finance; Finance; Entrepreneurship; Investment; Financial Services Industry; United States;


    Nanda, Ramana, and Liz Kind. "AngelList." Harvard Business School Case 814-036, September 2013. (Revised November 2013.) View Details
  5. Endeavor: Miami Heats Up

    William A. Sahlman, Ramana Nanda, David Lane and Lisa Mazzanti

    Endeavor Global was a nonprofit that for 15 years had worked to nurture entrepreneurship in emerging markets by selecting local high-impact entrepreneurs for mentoring and aid in scaling up their businesses from committed local business leaders. In summer 2012, Endeavor received an invitation to replicate its model in Miami, Florida, and the Endeavor board was meeting to debate the value of such a move. At issue were questions of organizational mission and the relevance of Miami, as well as branding, funding, and focus. The invitation had come in the midst of a major expansion effort by Endeavor into new emerging markets and threatened to disrupt those efforts and tax a new hybrid funding model which Endeavor was implementing. Founder Linda Rottenberg, with the support of her board, must determine the implications of possibly opening in Miami on Endeavor's resources and mission. How could Rottenberg justify to overseas affiliates a choice to invest in a first-world city?

    Keywords: social enterprise; entrepreneurs; scaling; emerging market entrepreneurship; not for profit; entrepreneurial finance; mentoring; business networks; hybrid nonprofit funding; Mission and Purpose; Nonprofit Organizations; Social Entrepreneurship; Emerging Markets; Problems and Challenges; Finance; Miami;


    Sahlman, William A., Ramana Nanda, David Lane, and Lisa Mazzanti. "Endeavor: Miami Heats Up." Harvard Business School Case 814-043, November 2013. (Revised December 2013.) View Details
  6. Getit

    Ramana Nanda and Rachna Tahilyani

    Sidharth Gupta, CEO of Getit Infomediary Ltd, had just received a term sheet from Helion Venture Partners (Helion), one of India's independent venture capital firms, offering to invest Rs 200 million in return for an equity stake in the company. His dream of transforming Getit from a regional print company into a digital company with broad geographical reach was within grasp. However, Gupta had to act fast; Helion's term sheet would expire in a fortnight if unexecuted. Bank finance and trade credit had tided Getit through tough times in the past, and Getit still had a Rs 250 million bank line to draw on. Should he take the venture capital investment? And if so, what implications would this have for his family business and for him personally?

    Keywords: venture capital; publishing; media and publishing; entrepreneurial finance; Venture Capital; Media; Entrepreneurship; India;


    Nanda, Ramana, and Rachna Tahilyani. "Getit." Harvard Business School Case 813-178, May 2013. (Revised June 2014.) View Details
  7. TerraPower

    William A. Sahlman, Ramana Nanda, Joseph B. Lassiter III and James McQuade

    John Gilleland, CEO of TerraPower, returned to his office after a lengthy meeting with potential investors. It was October 2012, and TerraPower was in the process of raising a $200M Series C round to finance the ongoing development of its next-generation nuclear reactor. Though early in the fundraising process, Gilleland noted that this most recent conversation was similar to conversations with other interested cleantech growth equity investors. The conversations circled around a common theme: "This is the biggest idea that's ever been presented at our partners' meeting. We love what you're doing, but it's not right for us as an investment." Outside of raising money from typical growth equity and infrastructure funds, Gilleland could partner with a government and/or form a joint venture with an existing nuclear power player. Reliance Industries as an investor in TerraPower could provide an entry point into the fast growing Indian market. At the same time, Gilleland and Gates had talked with China National Nuclear Corp. about a possible cooperation with TerraPower. Whom should Gilleland call next?

    Keywords: nuclear power; entrepreneurial finance; venture capital; Financing and Loans; Energy Industry; United States; China; India;


    Sahlman, William A., Ramana Nanda, Joseph B. Lassiter III, and James McQuade. "TerraPower." Harvard Business School Case 813-108, November 2012. (Revised December 2013.) View Details
  8. Entrepreneurial Finance in Finland?

    William R. Kerr, Ramana Nanda and Alexis Brownell

    This case describes a new venture attempting to bring early-stage entrepreneurial financing to Finland and other Nordic countries. Entrepreneurship is taking off in Finland, an area that historically has had little venture capital or high-growth start-up activity, but a gap remains for seed-stage financing. The founders are evaluating the best way to structure their private equity fund to reflect their own assets and abilities and the needs and resources of the entrepreneurial scene in the Nordics. The case evaluates whether to organize as an accelerator, a micro-VC fund, an incubator, a normal VC fund, or as a hybrid.

    Keywords: angels; angel investors; VC; micro-VC; accelerator; incubator; entrepreneurship; entrepreneurial finance; venture capital; Entrepreneurship; Venture Capital; Private Equity; Business Startups; Financial Services Industry; Finland; Scandinavia; Europe;


    Kerr, William R., Ramana Nanda, and Alexis Brownell. "Entrepreneurial Finance in Finland?" Harvard Business School Case 813-068, September 2012. (Revised March 2013.) View Details
  9. Owen's Precision Machining

    Ramana Nanda and James McQuade

    For the second time in fourteen months, Christopher Owen, the second-generation owner of Owen's Precision Machining (OPM), found himself running out of cash. Owen wondered what he was doing wrong. How much additional money would he need to raise to get OPM through the next twelve months, and what could he change now to fix his company for the long term? Owen's thoughts also turned to the conversation he had last month with two Harvard Business School alumni who were searching for a manufacturing business to acquire after spending the early part of their career in manufacturing at GE's Aircraft Engine division in Lynn, MA. Their offer of $1.1 million, or 6.9x times 2011 EBITDA of $159,292, was a pleasant surprise, but Owen was not interested in getting out of his family's business. Given the current cash flow situation, should Owen reconsider the acquisition offer?

    Keywords: Family Business; Cash Flow; Mergers and Acquisitions; Decision Making; Problems and Challenges; Business Strategy; Corporate Finance; Manufacturing Industry; Massachusetts;


    Nanda, Ramana, and James McQuade. "Owen's Precision Machining." Harvard Business School Case 813-036, July 2012. View Details
  10. H-Soft Mumbai

    Ramana Nanda

    Siddharth Kapoor, the Founder and CEO of H-Soft Mumbai reflected on his meeting as he walked out of VC Ventures' offices in Mumbai. After a few months of intensely pitching his startup to several different investors, he finally had a term sheet in hand. Despite this huge milestone, Kapoor knew it was only the start of a long process of raising money. He only had three days to get back to Sharma and indicate whether he would like to initiate the diligence process. While he was familiar with some of the terms venture capital investors put into their contracts, many others were completely alien to him. Which terms were important? Which ones should he focus on negotiating? He also knew that money was only part of what the venture capital brought to the table. Was VC Ventures the right partner for his business? Kapoor knew he had a busy few days ahead of him as he thought through all of the questions before getting back to Vikram Sharma.

    Keywords: entrepreneurial finance; venture capital term sheet; india; Business Startups; Investment; Venture Capital; Contracts; Partners and Partnerships; Entrepreneurship; Negotiation Offer; Decision Making;


    Nanda, Ramana. "H-Soft Mumbai." Harvard Business School Case 812-168, May 2012. (Revised October 2012.) View Details
  11. SecondMarket—Providing Liquidity for Shareholders of Privately Held iContact

    William A. Sahlman, Ramana Nanda and James McQuade

    In 2011, SecondMarket was an online platform that facilitated secondary transactions of illiquid assets, including private company stock. This case explores reasons for the decline in small-cap IPOs in the United States from the 1990s to the 2000s and how the emergence of SecondMarket provided liquidity to privately held companies like iContact, an email and social marketing software-as-a-service (SaaS) company.

    Keywords: Business and Shareholder Relations;


    Sahlman, William A., Ramana Nanda, and James McQuade. "SecondMarket—Providing Liquidity for Shareholders of Privately Held iContact." Harvard Business School Case 812-072, November 2011. (Revised May 2012.) View Details
  12. inge watertechnologies, GmbH

    Ramana Nanda, Carin-Isabel Knoop and Markus Mittermaier

    Using the financing history and exit choices of a German clean-tech startup as a lens, this case explores the reasons why venture-backed entrepreneurship is much lower in Germany than the US, despite a robust SME sector and large-corporate innovation in Germany. It also shows the tight link between investor incentives and a startup's product market strategy, including differences between "pure-play" VCs and corporate venture capital investors.

    Keywords: entrepreneurial finance; finance; negotiation; entrepreneurship; Venture Capital; Negotiation; Entrepreneurship; Technology Industry; Germany;


    Nanda, Ramana, Carin-Isabel Knoop, and Markus Mittermaier. "inge watertechnologies, GmbH." Harvard Business School Case 812-002, October 2011. (Revised June 2014.) View Details
  13. PunchTab, Inc.

    Ramana Nanda, William R. Kerr and Lauren Barley

    PunchTab was a Silicon Valley startup, founded in 2011, that was developing an Internet-based turnkey customer loyalty program for website owners, mobile applications developers, and brands. Founder/CEO Ranjith Kumaran must make strategic decisions about how to fund PunchTab's early operations and growth given the many options available: individual angel investors, super angel funds, incubators, and seed funds inside traditional venture capital firms.

    Keywords: Financial Strategy; Investment; Investment Funds; Web Sites; Mobile Technology; Corporate Entrepreneurship; Venture Capital; San Francisco;


    Nanda, Ramana, William R. Kerr, and Lauren Barley. "PunchTab, Inc." Harvard Business School Case 812-033, October 2011. View Details
  14. PunchTab, Inc. Investor Presentation Deck

    William R. Kerr and Ramana Nanda

    This case examines the PowerPoint presentation that Ranjith Kumaran, founder of the start-up PunchTab, Inc., is using for his investment pitches to venture capital firms. Students can discuss the materials that Kumaran has included, his presentation style, and what they would retain or remove from the presentation.

    Keywords: Entrepreneurship; Management; Presentations; Venture Capital; Business Startups;


    Kerr, William R., and Ramana Nanda. "PunchTab, Inc. Investor Presentation Deck." Harvard Business School Case 812-172, June 2012. View Details
  15. PunchTab, Inc.

    Ramana Nanda and William R. Kerr

    A Teaching Note for the PunchTab case, which discusses how high-tech startups structure seed financing, merits of angels vs. super angels vs. VCs, and related topics (e.g., convertible notes, priced versus non-priced financing rounds, entrepreneurial finance networks).

    Keywords: venture capital; finance; entrepreneurial finance; Venture Capital; Entrepreneurship;


    Nanda, Ramana, and William R. Kerr. "PunchTab, Inc." Harvard Business School Teaching Note 812-141, June 2012. (Revised March 2015.) View Details

    Ramana Nanda, William R. Kerr and Carin-Isabel Knoop

    In their second year, two Mexican HBS MBAs joined forces to start a search fund based in Mexico City. They had raised money to acquire an existing private company in Mexico with an initial enterprise value between $5 million and $15 million. Just seven months after raising the fund, they were about to close a deal on a target company, but the seller wants to renegotiate.

    Keywords: Business Exit or Shutdown; Corporate Entrepreneurship; Investment Funds; Corporate Finance; Mexico City;


    Nanda, Ramana, William R. Kerr, and Carin-Isabel Knoop. "INNOVA-MEX's Bid for ENKONTROL." Harvard Business School Case 812-008, October 2011. (Revised August 2012.) View Details

    William R. Kerr and Ramana Nanda

    In their second year, two Mexican HBS MBAs joined forces to start a search fund based in Mexico City. They had raised money to acquire an existing private company in Mexico with an initial enterprise value between $5 million and $15 million. Just seven months after raising the fund, they were about to close a deal on a target company, but the seller wants to renegotiate.

    Keywords: entrepreneurial finance; Finance; Strategy; Entrepreneurship; Mexico;


    Kerr, William R., and Ramana Nanda. "INNOVA-MEX's Bid for ENKONTROL (TN)." Harvard Business School Teaching Note 813-087, January 2013. View Details
  18. 1366 Technologies: Scaling the Venture

    Joseph B. Lassiter III, Ramana Nanda, David Kiron and Evan Richardson

    For some time, 1366's co-founders, Frank van Mierlo and Ely Sachs, had faced a choice, which was now made all the more stark: 1366 could expand to produce silicon wafers itself, raising the required capital from "friendly" investors and building shipment volume slowly, or 1366 could accelerate its market entry dramatically by partnering with the Asian manufacturers that had begun to dominate the world-wide solar industry. While accelerated growth was attractive to 1366 and its current investors, the company believed that it would face considerable risks if it were to expose its intellectual property to the "wrong" partners. 1366 had no intention of losing control of its technology, but given the pace of innovation and the active role of governments in the solar industry, van Mierlo and Sachs feared this might not be a race that could be won by the cautious.

    Keywords: Technology; Innovation Strategy; Corporate Strategy; Intellectual Property; Management Teams; Renewable Energy; Financial Strategy; Growth and Development Strategy; Corporate Finance; Energy Industry; Technology Industry; United States;


    Lassiter, Joseph B., III, Ramana Nanda, David Kiron, and Evan Richardson. "1366 Technologies: Scaling the Venture." Harvard Business School Case 811-076, March 2011. (Revised August 2012.) View Details
  19. U.S. Department of Energy & Recovery Act Funding: Bridging the "Valley of Death"

    Michael J. Roberts, Joseph B. Lassiter III and Ramana Nanda

    The case focuses on the U.S. Department of Energy (DOE) and the $38 billion of stimulus funding the DOE received to encourage clean tech. They focus on "bridging the valley of death" (i.e., helping young, innovative companies finance technically risky and very capital intensive development and commercialization programs). The case focuses on two DOE programs in particular, the Loan Guarantee Program and ARPA-E. The case raises the question of why these valleys of death exist, what can be done to deal with them, and how these DOE programs are designed and implemented.

    Keywords: Entrepreneurship; Financing and Loans; Government and Politics; Innovation and Invention; Programs; Business and Government Relations; Weather and Climate Change; Energy Industry; Green Technology Industry;


    Roberts, Michael J., Joseph B. Lassiter III, and Ramana Nanda. U.S. Department of Energy & Recovery Act Funding: Bridging the "Valley of Death". Harvard Business School Case 810-144, June 2010. (Revised June 2011.) View Details
  20. U.S. Department of Energy & Recovery Act Funding: Bridging the "Valley of Death" (TN)

    Ramana Nanda, Joseph B. Lassiter III and Michael J. Roberts

    Teaching Note for 810144.

    Keywords: Energy; Financing and Loans; Risk and Uncertainty; Commercialization; Programs; Innovation and Invention; Capital; Government and Politics; United States;


    Nanda, Ramana, Joseph B. Lassiter III, and Michael J. Roberts. U.S. Department of Energy & Recovery Act Funding: Bridging the "Valley of Death" (TN). Harvard Business School Teaching Note 811-083, April 2011. View Details
  21. 1366 Technologies

    Joseph B. Lassiter III, Ramana Nanda and David Kiron

    Just months after declaring their intent to become a solar cell equipment supplier, van Mierlo and Sachs were again revisiting the issue of what the company should be. Becoming a successful solar cell manufacturer would potentially be much more lucrative than becoming a successful equipment supplier. But, the latter was much less capital intensive and perhaps a less operationally risky approach. For van Mierlo and Sachs, the question—"What kind of company should 1366 become?"—was back on the table.

    Keywords: Business Startups; Energy Generation; Renewable Energy; Entrepreneurship; Financing and Loans; Commercialization; Corporate Strategy; Green Technology Industry;


    Lassiter, Joseph B., III, Ramana Nanda, and David Kiron. "1366 Technologies." Harvard Business School Case 810-005, October 2009. (Revised June 2010.) View Details
  22. KiOR: Catalyzing Clean Energy

    Ramana Nanda and Toby E. Stuart

    Biofuels start-up KiOR was developing a proprietary technology that had the potential to dramatically impact the emerging renewable energy landscape: a process that converted cellulosic biomass into "bio-crude," a hydrocarbon mixture with properties to those of crude oil. KiOR had been operating as a virtual organization, but with venture financing in place, founder and chief technology officer Paul O'Connor and the KiOR board needed to decide where to headquarter their business.

    Keywords: Business Headquarters; Decision Choices and Conditions; Renewable Energy; Entrepreneurship; Geographic Location;


    Nanda, Ramana, and Toby E. Stuart. "KiOR: Catalyzing Clean Energy." Harvard Business School Case 809-092, March 2009. (Revised July 2009.) View Details
  23. ICICI's Global Expansion

    Tarun Khanna and Ramana Nanda

    Follows the decision by ICICI (one of India's largest banks) to expand internationally in June 2001.

    Keywords: Emerging Markets; Global Strategy; Banks and Banking; Banking Industry; India;


    Khanna, Tarun, and Ramana Nanda. "ICICI's Global Expansion." Harvard Business School Case 706-426, September 2005. (Revised September 2006.) View Details

Cases and Teaching Materials

Technical and Module Notes

  1. Entrepreneurship Reading: Financing Entrepreneurial Ventures

    William R. Kerr, Ramana Nanda and James McQuade

    "Financing Entrepreneurial Ventures" introduces students to the key issues involved in the financing of entrepreneurial enterprises. The Reading begins by examining how business models shape external financing requirements. It then contrasts the choice to bootstrap with the option to raise external funds, as well as the traits of debt versus equity investment. Students learn about the different types of equity investors-including angels, VCs, and strategic investors-and follow an entrepreneurial venture's path through the financing stages. Students also examine how entrepreneurs can adjust business models to match financial conditions, and how they can reduce financing needs through alternative models such as partnerships. Finally, the Reading covers emerging funding models-such as crowdsourcing and accelerators-and the global aspects of entrepreneurial finance. There are 6 Interactive Illustrations included in the Reading: "Calculating a Cumulative Cash Flow Curve," "Asset Intensity Ratio," "Building a Cap Table," "How Investor Expectations and Target Returns Drive Company Ownership," "Payouts from Simple Equity and Convertible Investments," and "Seed Note Ownership and Value."
    Additionally, a supplemental section at the end of the Reading covers the details of different debt financing forms, the structures of VC firms and angel investment groups, and the forms of entrepreneurial finance needed for breakthrough discoveries.


    Kerr, William R., Ramana Nanda, and James McQuade. "Entrepreneurship Reading: Financing Entrepreneurial Ventures." Core Curriculum Readings Series. Harvard Business Publishing 8072, 2014. View Details
  2. Convertible Notes in Angel Financing

    Ramana Nanda and William R. Kerr

    This note introduces convertible notes in angel financing. It begins by delineating the differences between a priced and non-priced round. It then describes a specific example of a convertible note, with attention paid to technical details regarding valuation caps.

    Keywords: financing; Finance; Entrepreneurship;


    Nanda, Ramana, and William R. Kerr. "Convertible Notes in Angel Financing." Harvard Business School Background Note 813-017, September 2012. View Details
  3. Non-Equity Financing for Entrepreneurial Ventures

    Joan Farre-Mensa, Ramana Nanda and Piyush Jain

    Young, and particularly high-growth ventures often need to raise significant external finance, since their internal cash flow is usually insufficient to support the investments needed to grow. Although raising equity from venture capital or angel investors is the most well-known source of external finance for high-growth ventures, many entrepreneurs, particularly small business owners, rely on debt and other non-equity sources of capital to finance their ventures, either because equity capital is not available to them or because they want to avoid the ownership dilution and governance constraints associated with equity investments.

    This note focuses on these non-equity sources of financing for entrepreneurs, paying particular attention to how the emergence of new technologies in risk assessment have expanded their availability for young firms.

    Keywords: entrepreneurial finance; finance; Entrepreneurship; Finance; Financial Services Industry;


    Farre-Mensa, Joan, Ramana Nanda, and Piyush Jain. "Non-Equity Financing for Entrepreneurial Ventures." Harvard Business School Technical Note 814-005, October 2013. (Revised July 2015.) View Details
  4. Equity Compensation in Startup Ventures

    Ramana Nanda, Robert White and Stephanie Puzio

    Setting equitable and "market" level compensation for founders and early employees of startups is one of the most important elements of a new venture. It is not only central to attract and retain the best human capital for the startup, but is critical to align incentives between investors and management. This note provides a framework to think about compensation in startup ventures and is intended for entrepreneurs thinking about starting a venture, as well as for employees looking to join a young high-potential startup.

    Keywords: entrepreneurial finance; equity; Finance; Entrepreneurship;


    Nanda, Ramana, Robert White, and Stephanie Puzio. "Equity Compensation in Startup Ventures." Harvard Business School Background Note 815-074, March 2015. View Details
  5. Venture Capital Investment in the Clean Energy Sector

    Ramana Nanda and Shikhar Ghosh

    In this note, we examine the extent to which venture capital is adequately positioned for the rapid commercialization of clean energy technologies in the United States. The need for a revolution in clean energy is driven not just by environmental consequences of energy use, but also by the need for energy security, to address growing concerns about a crisis in the balance of payments, and as a potentially important source of domestic jobs. Our premise in this note is that a key aspect of such widespread change is that these issues cannot be "solved" by a single technology. Rather, technological changes will have to be pervasive and will require a whole range of different products and processes to come to market. Some of the technological progress will come from incremental innovations that do not depend on venture capital.

    Keywords: entrepreneurial finance; Entrepreneurship; Finance; Financial Services Industry;


    Nanda, Ramana, and Shikhar Ghosh. "Venture Capital Investment in the Clean Energy Sector." Harvard Business School Technical Note 814-052, March 2014. View Details
  6. Government Policy and Clean-Energy Finance

    Ramana Nanda, Sanjay Aggarwal and Nilam Ganenthiran

    What leads to market failures in finance of clean energy startups? How do different governments approach this issue?

    Keywords: Government and Politics; Finance; Policy; Energy Industry;


    Nanda, Ramana, Sanjay Aggarwal, and Nilam Ganenthiran. "Government Policy and Clean-Energy Finance." Harvard Business School Background Note 811-026, March 2011. (Revised June 2011.) View Details
  7. Location Choice for New Ventures: Cities

    William R. Kerr and Ramana Nanda

    Location choice is a critical decision for entrepreneurs. This note explores how entrepreneurs should think about different city options through a systematic framework that encompasses professional and personal issues. We use the intellectual frameworks of the cluster and industry agglomeration literatures to organize these factors. We then provide some tactical advice and worksheets for entrepreneurs to consider when selecting the location for their new venture.

    Keywords: City; Business Startups;


    Kerr, William R., and Ramana Nanda. "Location Choice for New Ventures: Cities." Harvard Business School Background Note 811-106, May 2011. (Revised March 2013.) View Details


Keynote Panels and Presentations

    Research Summary

  1. Ramana Nanda - Research

    by Ramana Nanda

    This interview with the Kauffman Foundation outlines my current research interests in greater detail:  http://tinyurl.com/kauffman-nanda   

    Work in Progress:

    The impact of Quickpay on Small Business outcomes (with Jean-Noel Barrot and William Kerr)

    Corporate Venture Capital and Innovation in the Pharmaceutical Industry (with Juanita Gonzalez-Uribe and Lora Dimitrova)

    Picking Winners and Judging in Business Plan Contests (with Chistian Catalini) 

    1. Winner of the 2015 Ewing Marion Kauffman Prize Medal for Distinguished Research in Entrepreneurship, awarded annually to one scholar under age 40 whose research has made a significant contribution to the literature in entrepreneurship.

    2. Won 2012 World Finance Conference Best Paper for "Investment Cycles and Startup Innovation" with Matthew Rhodes-Kropf.

    3. Awarded the 2009-2010 Kauffman Foundation Junior Faculty Fellowship in Entrepreneurship Research.

    4. Received the 2005-2006 Kauffman Foundation Dissertation Fellowship Award.

    5. Awarded a GBI-Stern Aspen Foundation Grant in 2004 for research on the Indian software industry.