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Financing Strategies of New Technology-based Firms

Author

Listed:
  • Susan Coleman

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

  • Alicia M. Robb

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

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.

Suggested Citation

  • Susan Coleman & Alicia M. Robb, 2011. "Financing Strategies of New Technology-based Firms," Review of Economics & Finance, Better Advances Press, Canada, vol. 1, pages 01-18, August.
    • Handle: RePEc:bap:journl:110401
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    References listed on IDEAS

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    Cited by:

    1. Cantillon, Leona & Gargan, Eric & Kren, Janez & Lawless, Martina & O'Toole, Conor, 2022. "Recent trends in SME investment in Ireland: exploring the pandemic and barriers to growth," Research Series, Economic and Social Research Institute (ESRI), number SUSTAT113.
    2. Neville, Conor & Lucey, Brian M., 2022. "Financing Irish high-tech SMEs: The analysis of capital structure," International Review of Financial Analysis, Elsevier, vol. 83(C).

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    More about this item

    Keywords

    Technology-based firms; New firms; Financing strategies; Kauffman Firm Survey;
    All these keywords.

    JEL classification:

    • G31 - Financial Economics - - Corporate Finance and Governance - - - Capital Budgeting; Fixed Investment and Inventory Studies
    • M13 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - New Firms; Startups
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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