Dissertation: “Entrepreneurial Discovery Capital"
Abstract: This dissertation consists of three chapters. It is motivated by some of the most complex and still largely unexplained economic phenomena: economic cycles. This includes the recurring cycle of economic boom and recession that has appeared in all capitalist countries since the Industrial Revolution, and it includes the investment “manias” or “bubbles” that often accompany these economic booms. The first two chapters mark a theoretical investigation utilizing two schools of thought known for their work on business cycles: (1) the Austrian School and (2) the economic development theory of Joseph Schumpeter. The third chapter identifies a novel explanation for economic cycles: a type of capital I call “Entrepreneurial Discovery Capital” whose purpose is the screening of viable entrepreneurial ventures. The original contribution of this dissertation is the concept of Entrepreneurial Discovery Capital. Using venture capital finance as a model, it explains how the financing of entrepreneurial startups during periods of rapid technological innovation creates business cycles that, despite the associated downturns, are constructive and drive economic growth.