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Surveys of current and potential entrepreneurs suggest that obtaining adequate access to capital is one of the biggest hurdles to starting and growing a new business. Given the important role that entrepreneurship is believed to play in the process of creative destruction–and hence economic growth–it is not surprising that attempts to alleviate financing constraints for would-be entrepreneurs is an important goal for policy makers across the world. For example, the US Small Business Administration funded or assisted in the funding of about 200 000 loans in fiscal year 2007, at an administrative cost of about $1000 per loan (SBA, 2008). Financial assistance for entrepreneurs is also high on the agenda in the European Union and the OECD, where member states are urged to promote the availability of risk capital financing for entrepreneurs (OECD, 2004). The underlying premise behind these policies is that there are …