Imperial College London

Professor Ramana Nanda

Business School

Professor of Entrepreneurial Finance
 
 
 
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Contact

 

+44 (0)20 7594 7394ramana.nanda CV

 
 
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Location

 

1.06A53 Prince's GateSouth Kensington Campus

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Summary

 

Publications

Publication Type
Year
to

25 results found

Nanda R, Barrot J-N, 2020, The employment effects of faster payment: Evidence from the federal quickpay reform, The Journal of Finance, Vol: 75, Pages: 3139-3173, ISSN: 0022-1082

We study the impact of Quickpay, a reform that permanently accelerated payments to small business contractors of the U.S. government. We find a strong direct effect of the reform on employment growth at the firm level. However, we document substantial crowding out of nontreated firms' employment within local labor markets. While the overall net employment effect is positive, it is close to zero in tight labor markets. Our results highlight an important channel for alleviating financing constraints in small firms, but emphasize the general‐equilibrium effects of large‐scale interventions, which can lead to lower aggregate outcomes depending on labor market conditions.

Journal article

Nanda R, Samila S, Sorenson O, 2020, The persistent effect of initial success: evidence from venture capital, Journal of Financial Economics, Vol: 137, Pages: 231-248, ISSN: 0304-405X

We use investment-level data to study performance persistence in venture capital (VC). Consistent with prior studies, we find that each additional IPO among a VC firm's first ten investments predicts as much as an 8% higher IPO rate on its subsequent investments, though this effect erodes with time. In exploring its sources, we document several additional facts: successful outcomes stem in large part from investing in the right places at the right times; VC firms do not persist in their ability to choose the right places and times to invest; but early success does lead to investing in later rounds and in larger syndicates. This pattern of results seems most consistent with the idea that initial success improves access to deal flow. That preferential access raises the quality of subsequent investments, perpetuating performance differences in initial investments.

Journal article

Lerner J, Nanda R, 2020, Venture capital's role in financing innovation: what we know and how much we still need to learn, Journal of Economic Perspectives, Vol: 34, Pages: 237-261, ISSN: 0895-3309

Venture capital is associated with some of the most high-growth and influential firms in the world. Academics and practitioners have effectively articulated the strengths of the venture model. At the same time, venture capital financing also has real limitations in its ability to advance substantial technological change. Three issues are particularly concerning to us: 1) the very narrow band of technological innovations that fit the requirements of institutional venture capital investors; 2) the relatively small number of venture capital investors who hold and shape the direction of a substantial fraction of capital that is deployed into financing radical technological change; and 3) the relaxation in recent years of the intense emphasis on corporate governance by venture capital firms. While our ability to assess the social welfare impact of venture capital remains nascent, we hope that this article will stimulate discussion of and research into these questions.

Journal article

Comin D, Nanda R, 2019, Financial development and technology diffusion, IMF ECONOMIC REVIEW, Vol: 67, Pages: 395-419, ISSN: 2041-4161

We examine the extent to which financial market development impacts the diffusion of 16 major technologies, looking across 17 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 and diffusion of technologies.

Journal article

Ewens M, Nanda R, Rhodes-Kropf M, 2018, Cost of experimentation and the evolution of venture capital, Journal of Financial Economics, Vol: 128, Pages: 422-442, ISSN: 0304-405X

We study how technological shocks to the cost of starting new businesses have led the venture capital model to adapt in fundamental ways over the prior decade. We both document and provide a framework to understand the changes in the investment strategy of venture capitalists (VCs) in recent years – an increased prevalence of a “spray and pray” investment approach – where investors provide a little funding and limited governance to an increased number of startups that they are more likely to abandon, but where initial experiments significantly inform beliefs about the future potential of the venture. This adaptation and related entry by new financial intermediaries has led to a disproportionate rise in innovations where information on future prospects is revealed quickly and cheaply, and reduced the relative share of innovation in complex technologies where initial experiments cost more and reveal less.

Journal article

Nanda R, Rhodes-Kropf M, 2017, Financing risk and innovation, Management Science, Vol: 63, Pages: 901-918, ISSN: 0025-1909

We provide a model of investment in 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. In equilibrium, financing risk disproportionately impacts innovative ventures with the greatest real option value by creating a trade-off between protecting the firm from financing risk and maximizing its real option value. We propose that extremely novel technologies may need “hot” financial markets to get through the initial period of discovery or diffusion.

Journal article

Nanda R, Rhodes-Kropf M, 2017, INNOVATION POLICIES, ENTREPRENEURSHIP, INNOVATION, AND PLATFORMS, Editors: Furman, Gawer, Silverman, Stern, Publisher: EMERALD GROUP PUBLISHING LTD, Pages: 37-80

Book chapter

Mollick E, Nanda R, 2016, Wisdom or madness? Comparing crowds with expert evaluation in funding the arts, Management Science, Vol: 62, Pages: 1533-1553, ISSN: 0025-1909

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.”

Journal article

Nanda R, Rhodes-Kropf M, 2016, Regional variation in venture capital: Causes and consequences, Geneva Reports on the World Economy, Vol: 2016, Pages: 55-71, ISSN: 1607-8616

Journal article

Nanda R, Kropf MR, 2016, Financing entrepreneurial experimentation, Innovation Policy and the Economy, Vol: 16, Pages: 1-23, ISSN: 1531-3468

The fundamental uncertainty of new technologies at their earliest stages implies that it is virtually impossible to know the true potential of a venture without learning about its viability through a sequence of investments over time. We show how this process of experimentation can be particularly valuable in the context of entrepreneurship because most new ventures fail completely, and only a few become extremely successful. We also shed light on important costs to this process of experimentation and demonstrate how these can fundamentally alter both the rate and direction of start‑up innovation across industries, regions, and periods of time.

Journal article

Nanda R, Kind L, 2015, Case Study Is a Start-Up's Strength Becoming Its Weakness?, HARVARD BUSINESS REVIEW, Vol: 93, Pages: 145-147, ISSN: 0017-8012

Journal article

Nanda R, Rhodes-Kropf M, 2015, Financing experiments, SCIENCE, Vol: 348, Pages: 1200-1200, ISSN: 0036-8075

Journal article

Sahlman WA, Nanda R, 2015, Stretch the Mission?, HARVARD BUSINESS REVIEW, Vol: 93, Pages: 113-117, ISSN: 0017-8012

Journal article

Sahlman WA, Nanda R, 2015, Stretch the mission?, Harvard Business Review, Vol: 2015, ISSN: 0017-8012

Journal article

Kerr WR, Nanda R, 2015, Financing Innovation, ANNUAL REVIEW OF FINANCIAL ECONOMICS, VOL 7, Editors: Lo, Merton, Publisher: ANNUAL REVIEWS, Pages: 445-462

Book chapter

Nanda R, Nicholas T, 2014, Did bank distress stifle innovation during the Great Depression?, Journal of Financial Economics, Vol: 114, Pages: 273-292, ISSN: 0304-405X

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.

Journal article

Astebro T, Herz H, Nanda R, Weber RAet al., 2014, Seeking the Roots of Entrepreneurship: Insights from Behavioral Economics, JOURNAL OF ECONOMIC PERSPECTIVES, Vol: 28, Pages: 49-69, ISSN: 0895-3309

Journal article

Kerr WR, Nanda R, Rhodes-Kropf M, 2014, Entrepreneurship as Experimentation, JOURNAL OF ECONOMIC PERSPECTIVES, Vol: 28, Pages: 25-48, ISSN: 0895-3309

Journal article

Nanda R, Rhodes-Kropf M, 2013, Investment cycles and startup innovation, JOURNAL OF FINANCIAL ECONOMICS, Vol: 110, Pages: 403-418, ISSN: 0304-405X

Journal article

Canales R, Nanda R, 2012, A darker side to decentralized banks: Market power and credit rationing in SME lending, JOURNAL OF FINANCIAL ECONOMICS, Vol: 105, Pages: 353-366, ISSN: 0304-405X

Journal article

Kerr WR, Nanda R, 2011, Financing constraints and entrepreneurship, Handbook of Research on Innovation and Entrepreneurship, Pages: 88-103, ISBN: 9781848440876

Book chapter

Nanda R, Khanna T, 2010, Diasporas and Domestic Entrepreneurs: Evidence from the Indian Software Industry, JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Vol: 19, Pages: 991-1012, ISSN: 1058-6407

Journal article

Nanda R, Sorensen JB, 2010, Workplace Peers and Entrepreneurship, MANAGEMENT SCIENCE, Vol: 56, Pages: 1116-1126, ISSN: 0025-1909

Journal article

Kerr WR, Nanda R, 2010, BANKING DEREGULATIONS, FINANCING CONSTRAINTS, AND FIRM ENTRY SIZE, 24th Annual Congress of the European-Economic-Association, Publisher: OXFORD UNIV PRESS, Pages: 582-593, ISSN: 1542-4766

Conference paper

Kerr WR, Nanda R, 2009, Democratizing entry: Banking deregulations, financing constraints, and entrepreneurship, JOURNAL OF FINANCIAL ECONOMICS, Vol: 94, Pages: 124-149, ISSN: 0304-405X

Journal article

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