Finally, venture capital financing is provided on a piecemeal basis over several stages, which reduces the entrepreneur’s incentive to skimp on effort during the early life of the firm.
It should be noted that providing financing to small and medium-sized enterprises is very important in the euro area because these categories of firms represent a significant component of the economies of many of its members. Thus, the financing of small- and medium-sized firms is crucial for fostering entrepreneurship, competition, innovation and growth in Europe.