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Specifics of Startup Financing at Different Stages of the Life Cycle

Marina B. Trachenko () and Anastasia V. Kozhanova ()
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Marina B. Trachenko: State University of Management, Moscow 109542, Russian Federation
Anastasia V. Kozhanova: State University of Management, Moscow 109542, Russian Federation

Finansovyj žhurnal — Financial Journal, 2019, issue 5, 90-103

Abstract: Given the limited bank lending instruments, there is an active expansion of the financial intermediary market and financial instruments for startups, which are the main subjects of development for any country’s innovative economy. This creates an increased interest in the study of the specifics of these companies’ financing structure. The purpose of this study is to systematize the sources, forms and instruments of startup financing depending on the life cycle stage, as well as to examine their application in Russian practice. The methods used include bibliographic and logical analysis, comparison, synthesis and systematic approach, classification, and mathematical methods of statistical data processing. The result is a developed classification system for startup financing sources where the most salient subjects and providers of the investment process, the tools they use, and forms of financing have been identified for each stage of the startups’ life cycle. The presented classification can be applied in developing programs, strategies, and regulatory documents both by the government and private companies. A comparative analysis of the startup financing structure at the seed and early stages in Russia and Europe has revealed a number of significant differences: the largest share in Europe belongs to business angels, as opposed to crowdfinancing and venture funds in the Russian Federation, the share of the latter growing while the share of business angels is decreasing; in addition, in Russia, state investments in startups through both venture funds and corporations with state share have considerable weight.

Keywords: startup; startup life cycle; startup financing; risk; innovation company; crowdfinancing; venture investments (search for similar items in EconPapers)
JEL-codes: G21 G23 G24 O30 (search for similar items in EconPapers)
Date: 2019
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DOI: 10.31107/2075-1990-2019-5-90-103

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Handle: RePEc:fru:finjrn:190507:p:90-103