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Nascent Entrepreneurs, Innovation and Financing Constraints

  • David B. Audretsch
  • Werner Bönte
  • Prashanth Mahagaonkar

Innovative nascent entrepreneurs face the problem of obtaining finance, mainly due to information problems. We use new data on capital seeking start-ups allowing distinction between planning stage and early stage. Being innovative does not affect the probability of having external finance in the planning stage but has a positive effect in the early stage. Early start-ups with patents have a significantly higher probability of having equity whereas debt is not affected. Patents, coupled with prototypes have a higher probability for external finance which may be due to reduced uncertainties and learning. The most important determinant of debt is house ownership.

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Paper provided by DRUID, Copenhagen Business School, Department of Industrial Economics and Strategy/Aalborg University, Department of Business Studies in its series DRUID Working Papers with number 07-09.

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Date of creation: 2007
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Handle: RePEc:aal:abbswp:07-09
Contact details of provider: Web page: http://www.druid.dk/

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