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Entrepreneurial finance journeys: embeddedness and the finance escalator

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  • Ekaterina Murzacheva
  • Jonathan Levie

Abstract

This paper re-visits the traditional model of the finance escalator, which outlines alternative financial pathways for entrepreneurs depending on their aspirations and stage of development. Building on social, spatial and institutional embeddedness perspectives, the dynamic and interactional challenges of financial decisions are captured through an exploratory interpretivist approach. Ten early funding journeys of entrepreneurs in Scotland, all of whom sought external funding, were scrutinized with the objective of revealing motivations, reasoning, and patterns behind funding decisions. Surprisingly, these entrepreneurs all initially sought value-added financial capital, but issues including control (perceived as ownership), speed of access, and external environmental pressures caused them to accept offers (often unsolicited) from familiar sources. As a result, a revised finance escalator is proposed. The extent to which these findings are context specific is discussed.

Suggested Citation

  • Ekaterina Murzacheva & Jonathan Levie, 2020. "Entrepreneurial finance journeys: embeddedness and the finance escalator," Venture Capital, Taylor & Francis Journals, vol. 22(2), pages 185-214, June.
    • Handle: RePEc:taf:veecee:v:22:y:2020:i:2:p:185-214
    DOI: 10.1080/13691066.2020.1767756
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    Cited by:

    1. Harrison, Richard T. & Bock, Adam J. & Gregson, Geoff, 2020. "Stairway to heaven? rethinking angel investment policy and practice," Journal of Business Venturing Insights, Elsevier, vol. 14(C).
    2. Hor, Shoon Chan (Timothy) & Chang, Artemis & Torres de Oliveira, Rui & Davidsson, Per, 2021. "From the theories of financial resource acquisition to a theory for acquiring financial resources - how should digital ventures raise equity capital beyond seed funding," Journal of Business Venturing Insights, Elsevier, vol. 16(C).

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