We present a dynamic model of venture capital financing, described as a sequential investment problem with uncertain outcome. Each venture has a critical, but unknown threshold beyond which it cannot progress. If the threshold is reached before the completion of the project, then the project...

We consider the financing of a research projectunder uncertainty about the time of completion and the probability of eventualsuccess. We distinguish between two financing modes, namely relationshipfinancing, where the allocation decision of the entrepreneur is observable, andarm's-length...