Who Funds Technology-Based Small Firms? Evidence from Belgium
AbstractUsing an original survey sample of 103 unquoted Belgian technology-based small firms (TBSFs), we examine the capital structure of start-up companies during their consecutive development stages. We find that internal funds, either alone as personal savings or in combination with family and friends, to be the primary source of financing. Personal funds of the founders are used to finance the start of 82 percent of TBSFs. Commercial bank and government funds are the most important sources of external finance for TBSFs subsequent to start-up. Most founders agreed that business angels and venture capitalists play a greater role at later stages. However, once granted, more substantial amounts of funding come from venture capitalists. There is also evidence that suggests an evolution in the mix of internal and external sources of finance. Finally, our findings based on founders’ scores in raising external funds suggest a call for urgent policy action to improve access to and availability of early-stage entrepreneurial finance in Belgium. We discuss our findings in light of the capital structure of small firms relating to TBSFs.
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Bibliographic InfoPaper provided by ULB -- Universite Libre de Bruxelles in its series Working Papers CEB with number 04-027.RS.
Length: 14 p.
Date of creation: 2004
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capital and ownership structure; entrepreneurial finance; technology-based firms; seed capital; survey.;
Other versions of this item:
- A. Bozkaya & B. Van Pottelsberghe De La Potterie, 2008. "Who Funds Technology-Based Small Firms? Evidence From Belgium," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 17(1-2), pages 97-122.
- Bruno Van Pottelsberghe & ANT Bozkaya, 2008. "Who funds technology-based small firms? Evidence from Belgium," ULB Institutional Repository 2013/6387, ULB -- Universite Libre de Bruxelles.
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- M13 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - New Firms; Startups
- M21 - Business Administration and Business Economics; Marketing; Accounting - - Business Economics - - - Business Economics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-02-05 (All new papers)
- NEP-ENT-2006-02-05 (Entrepreneurship)
- NEP-FIN-2006-02-05 (Finance)
- NEP-FMK-2006-02-05 (Financial Markets)
- NEP-INO-2006-02-05 (Innovation)
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