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Financing Strategies of New Technology-based Firms

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Author Info

  • Susan Coleman

    ()
    (Barney School of Business, University of Hartford, U.S.A.)

  • Alicia M. Robb

    ()
    (Ewing Marion Kauffman Foundation, U.S.A.)

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    Abstract

    In this paper, we examine the financing strategies of startup firms included in the Kauffman Firm Survey with a focus on the financing strategies of new technology-based firms. Our findings support the Pecking Order and Life Cycle theories, at least in the case of new technology-based firms. Our results reveal that technology-based firms used a higher ratio of owner provided financing and lower ratios of financing from other insiders or external debt than all firms during their startup year. Thus, they were more dependent on the entrepreneur¡¯s personal financial resources than new firms overall. In spite of this, however, our findings reveal that technology-based firms raised larger amounts of capital than all firms during their startup year. This was particularly true for growth oriented technology firms and technology firms with high credit quality.

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    Bibliographic Info

    Article provided by Better Advances Press, Canada in its journal Review of Economics & Finance.

    Volume (Year): 1 (2011)
    Issue (Month): (August)
    Pages: 01-18

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    Handle: RePEc:bap:journl:110401

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    Related research

    Keywords: Technology-based firms; New firms; Financing strategies; Kauffman Firm Survey;

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    References

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    3. Giudici, Giancarlo & Paleari, Stefano, 2000. " The Provision of Finance to Innovation: A Survey Conducted among Italian Technology-Based Small Firms," Small Business Economics, Springer, vol. 14(1), pages 37-53, February.
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    16. Myers, Stewart C. & Majluf, Nicolás S., 1945-, 1984. "Corporate financing and investment decisions when firms have information that investors do not have," Working papers 1523-84., Massachusetts Institute of Technology (MIT), Sloan School of Management.
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