Innovation and Financial Markets

Christophe Dispas holds a PhD in Economics and Management from the Université catholique de Louvain, Belgium, and is Finance Professor and Associate Dean at SKEMA Business School, Sophia Antipolis, France.Georges Kayanakis is an engineer in advanced industry and founder of the start-up, ASK, which specializes in contactless technology.Nicolas Servel holds a Diplôme d'Etudes Supérieures Spécialisées (DESS) from Paris Dauphine University, France, and an MBA from the University of Cambridge, UK. He is the Director of the Master of Science in Entrepreneurship and Innovation at SKEMA Business School, Sophia Antipolis, France.Ludmila Striukova holds a PhD in Management from the University of London, UK, and is Associate Dean of the Academy of Innovation at SKEMA Business School, Paris, France.

• Foreword ixIntroduction xiiiChapter 1. From the Idea to the Stock Market 11.1. Prologue 11.2. A long and rigorous path 41.2.1. A graphic representation 41.2.2. Steps to be taken 61.2.3. Product marketing by the menu 331.3. Categories to represent the progress made 391.3.1. Brief description of the categories 401.3.2. Intangible assets to be acquired to move from one category to the next: detailed description and required satisfaction levels 411.4. Use of criteria satisfaction levels as a rating guide 53Chapter 2. How to Develop the Innovative Capacity of Companies 552.1. Introduction 552.2. Siphoning queries to produce an idea 562.3. Having the means (skills) required 572.3.1. Technical achievements 572.3.2. Protection against dangers 582.3.3. Generating routines and procedures 592.4. Having an appropriate organization 592.4.1. Prerequisites 592.4.2. Building the capacity to innovate 60Chapter 3. Innovation and Its Challenges for the Company 653.1. Introduction 653.2. General innovation policy: a vital issue, survival 663.2.1. Uncertainties and costs of innovation, in return for survival 673.2.2. A deadly risk 703.3. Innovation: major sectoral issues 713.3.1. Innovation? Improving and creating new products/services 713.3.2. The challenge of differentiation 733.3.3. The challenge of being the leader 753.3.4. The challenge of reducing production costs 773.3.5. The challenge of penetrating new markets 783.3.6. The challenge of creating a competitive advantage CSR and/or GDPR 79Chapter 4. Financial Evaluation of an Innovation Project 854.1. Introduction 854.2. Costing 864.2.1. Determining net initial costs 884.2.2. Calculating the theoretical value of the start-up 904.3. Judgment (goodwill) 904.3.1. Purpose 904.3.2. Contents of the data room information source 914.3.3. Data room organization and using criteria favourable to innovation 914.3.4. Using criteria conducive to innovation: approach to be followed 924.4. Negotiation 92Chapter 5. Funding Innovation 955.1. Issues related to funding growth 965.2. Means of funding growth 1005.2.1. Initial shareholders’ equity 1005.2.2. Love money 1025.2.3. Competitions 1035.2.4. Public aid 1045.2.5. Crowdfunding 1055.2.6. Interest-free loans 1095.2.7. Business angels 1095.2.8. Venture capital 1115.2.9. Bank financing 1145.2.10. Private equity 117Chapter 6. Valorization of Innovation by Financial Markets 1236.1. How to determine the expected return from innovative companies 1246.1.1. Capital asset pricing model (CAPM) 1246.1.2. Multifactorial models: arbitrage pricing theory (APT) 1316.1.3. Multi-factor models based on microeconomic factors 1326.1.4. Carhart model 1366.1.5. Fama and French five-factor model 1386.1.6. Sensitivity of innovative companies to risk factors 1416.2. Outperformance of innovative companies 141Chapter 7. Innovation and Credit Risk 1437.1. Credit risk 1437.2. Credit risk and rating agencies 1467.3. Relationship between credit risk and innovation 1477.4. Innovative companies less risky in the long-term? 1497.5. Conclusion 150Chapter 8. Financial Innovation: Creating Value… or Risk? 1518.1. Basic concepts of portfolio management 1518.1.1. Diversification 1518.1.2. Markowitz model 1528.1.3. Financial innovation “theoretically” a source of diversification 1588.2. Risk-creating financial innovation? 159Conclusion 161References 163Index 171