This collection of state-of-the- art essays explores the important role of venture capital finance used to invest mainly in small and medium size firms with good growth rospects. It shows that important features of contract and rganizational law have substantially contributed to the competitiveness of the US venture capital industry. INDICE 1 Joseph A. McCahery and Luc Renneboog: Venture Capital Financing of Innovative Firms: An Introduction Part I: Venture Capital Financing 2 Bernard S. Black and Ronald J. Gilson: Venture Capital and the Structure of Financial Markets: Banks Versus Stock Markets 3 Thomas Hellman: Going Public and the Option Value of Convertible Securities in Venture Capital 4 Steven N. Kaplan and Per Strömberg: Evidence on the Venture Capital Investment Process: Contracting, Screening, and Monitoring 5 Dirk Bergemann and Ulrich Hege: The Value of Benchmarking 6 William W. Bratton: Venture Capital on the Downside: Preferred Stock and Corporate Control Part II: Innovation, Law, and Finance 7 John Armour: Law, Innovation, and Finance 8 Joseph A. McCahery and Erik P. M. Vermeulen: Business Organization Law and Venture Capital 9 Samuel Kortum and Josh Lerner: Venture Captial and Innovation: Clues to a Puzzle Part III: Valuation of High-Tech Firms 10 Han T. J. Smit and Lenos Trigeorgis: Real Options: Principles of Valuation and Strategy 11 John R. M. Hand: The Market Valuation of Biotechnology Firms and Biotechnology R&D 12 Enrico Perotti and Silvia Rossetto: Internet Portals as Portfolios of Entry 13 Michael Cooper and O. Raghavendra Rau: The Dotcom Premium: Rational Valuation or Irrational Exuberance? 14 Didier Cossin, Benoît Leleux, and Entela Saliasi: The Liquidation Preference in Venture Capital Investment Contracts: A Real Options Approach Part IV: Venture Capital Exits and IPOs 15 Douglas J. Cumming and Jeffrey G. MacIntosh: The Extent of Venture Capital Exits: Evidence from Canada and the United States 16 Edward B. Rock: Greenhorns, Yankees, and