Who Funds Technology-Based Small Firms? Evidence from Belgium

Ant Bozkaya () and Bruno van Pottelsberghe de la Potter ()

No 04-027.RS, Working Papers CEB from ULB -- Universite Libre de Bruxelles

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.

Keywords: capital and ownership structure; entrepreneurial finance; technology-based firms; seed capital; survey. (search for similar items in EconPapers)
JEL-codes: G32 M13 M21 (search for similar items in EconPapers)
Pages: 14 p.
Date: 2004
New Economics Papers: this item is included in nep-ent, nep-fin, nep-fmk and nep-ino
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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