Financing Strategies of New Technology-based Firms

Susan Coleman () and Alicia M. Robb ()
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Susan Coleman: Barney School of Business, University of Hartford, U.S.A.
Alicia M. Robb: Ewing Marion Kauffman Foundation, U.S.A.

Review of Economics & Finance, 2011, vol. 1, 01-18

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.

Keywords: Technology-based firms; New firms; Financing strategies; Kauffman Firm Survey (search for similar items in EconPapers)
JEL-codes: G31 M13 O30 (search for similar items in EconPapers)
Date: 2011
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Citations: View citations in EconPapers (2)

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