The literature on the financing of innovative projects follows two trends: one contemplates that either the prospective fundees or the potential funders use their preferences to choose the other party out of a range of theoretical possibilities; the other refers to project owners or investors that actively look for an “opportunity” and try to talk the other party into entering the funding relationship. These views, however, cannot explain several facts such as: why projects rejected by some funders are accepted by others, why IPOs and markets are not attractive to all players or why that changes over time and across settings, how can State funds support a sector across regions, or how players’ and setting features and time affect funding criteria. A critique of these explanations sees three main shortcomings: lack of balance (i.e.,one party’s initiative prevails), bias (i.e., criteria of the domineering party prevail), and disembeddedness (i.e., milieu factors and changes over time are ignored). We think that an analysis supported by a sectoral approach may contribute to build a more articulate, integral insight about the funding of innovation. The bio-pharmaceutical sector was chosen because it exhibits amazing complexity related to the heterogeneity embodied by a multifaceted network of players (e.g., universities, companies, potential financiers, regulation bodies), to the nature and development path of innovative projects, and to the competitive/collaborative interactions framed in a particular setting. Hence, a qualitative approach based on the case study of the sector is the choice for this study. Case data are collected through semi-structured interviews with thirty participants that have played different roles in organisations of the bio-pharmaceutical sector or are highly experienced VC practitioners. Our findings allow us to propose an enhanced characterisation of innovation financing by showing that: i) Investors’ understanding of a sector is essential for funding decisions and can be updated through networking; ii) Networks facilitate firms-funders contact, coordination among funders, enhancement of financiers’ knowledge about the sector, and venture owners’ knowledge of track record and potential benefits of investors; iii) Interactions involve other actors in different roles and support network-based learning; iv) Funding decisions are impacted by the geographic availability of sources/mechanisms of finance and by their readiness to fund specific venture stages; v) Investors’ specificities matter; vi) Trends of change impact the availability of funding sources/mechanisms since they imply a reorganisation of the relations and interactions among players in the sector. Therefore, we propose a systemic analytic explanation where the strategy of funders (generalist or dedicated), therefore their role in a particular setting, is essentially defined in relation to the structure and dynamics of their knowledge consolidation system; then, we derive a number of implications for firm managers, investors, and policy-makers. Finally, the main limitations of this work and some further questions for future research are stated.

In this study is analysed how the ERDF (European Regional Development Funding) in East-Netherlands approaches innovation and how this approach is shaped and complemented byEuropean, national and regional policy. This is done by analysing how the targeted interventionapproach and the institutional approach are used in the ERDF and adjacent policies. The twoapproaches are both based on a different argument on how innovation policy makes an impact.By doing this the study contributes to the analysis of European policy and it empirically appliesconcepts used in theory on innovation and regional economic development. This gives policy makersinput for the development of innovation policy and especially for the development of Europeanpolicy post 2020. For academia this study shows theoretical gaps in the concepts applied andprovides suggestions for further research on these concepts. The study concludes that ERDF fundingin East-Netherlands is strongly based on the targeted intervention approach. The use of thisapproach results from the governance structure under which ERDF is implemented. The EU 2020strategy has been influential in the final shape of the policy, while the national level has a lessimportant role. Innovation policy at the regional level complements the ERDF policy because it is alsobased on concepts from the targeted intervention approach. The institutional policy implemented atthe European and national level has weaker links with the ERDF programme.