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Defining and distributing value in entrepreneurial finance

Authors: Sarah Hughes*, University of Cambridge
Topics: Economic Geography
Keywords: Rentiership, finance, entrepreneurial finance, contracts, business school
Session Type: Paper
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The making of a world of rents is contingent on deeply ingraining a particular understanding of finance’s role in the economy. This paper analyses the practices of entrepreneurial finance and performativity of business school courses to explore the micro practices of making rents, opening up new lines of enquiry for rentiership by centring embodied knowledge production and education’s role, and focusing on rentiership’s micro practices.

In this paper we argue that the contracts which establish ownership and voting rights between entrepreneurs and venture capitalists currently reinforce rentiership because they reflect and contribute to the normalisation of prioritising finance over ideas and labour. We analyse how ‘term sheets’, a preliminary contract that establishes the relations between entrepreneurs and financial investors, are taught on MBA courses at leading business schools in a way that reinforces narratives around ‘scarce capital’ and an abundance of ideas and labour. Through the narratives in entrepreneurial finance courses, the courses’ material and the stories of entrepreneurs, we demonstrate the mechanisms and practices that make rents. We then show how term sheets more generally function as a space where value - of ideas, labour and finance - is implicitly (and explicitly in some cases) measured and distributed. We argue this currently prioritises venture capitalists, but need not always - contracts are a space of contest. Given this, and the socially constructed nature of value, it is not inevitable that sources of finance are prioritised but rather the normalisation of the dominant paradigm have entrenched the current system.

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