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Who Funds Technology-Based Small Firms? Evidence from Belgium

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Author Info
Ant Bozkaya () (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels)
Bruno Van Pottelsberghe () (Centre Emile Bernheim, Solvay Business School, Université Libre de Bruxelles, Brussels)

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Abstract

Using 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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File URL: http://www.solvay.edu/EN/Research/Bernheim/documents/wp04027.pdf
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File Function: First version, 2004
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Publisher Info
Paper provided by Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB) in its series Working Papers CEB with number 04-027.RS.

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Length: 14 pages
Date of creation: Sep 2004
Date of revision:
Handle: RePEc:sol:wpaper:04-027

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Related research
Keywords: capital and ownership structure; entrepreneurial finance; technology-based firms; seed capital; survey.;

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Find related papers by JEL classification:
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure
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

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Joël Ludvigsen, 2009. "Decision time in Belgium: an experiment as to how business angels evaluate investment opportunities," Working Papers CEB 09-037.RS, Université Libre de Bruxelles, Solvay Brussels School of Economics and Management, Centre Emile Bernheim (CEB). [Downloadable!]
  2. Antonelli Cristiano & Teubal Morris, 2008. "Venture capital as a mechanism for knowledge governance : new markets and innovation-led economic growth," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200805, University of Turin. [Downloadable!]
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