New directions in startup financing: The case of French banks

Catherine Deffains-Crapsky ()
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Catherine Deffains-Crapsky: GRANEM - Groupe de Recherche Angevin en Economie et Management - UA - Université d'Angers - AGROCAMPUS OUEST - Institut National de l'Horticulture et du Paysage

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Abstract: Entrepreneurship plays a crucial role in economic development and understanding the financing of new ventures is crucial. As pointed out by Cumming and Vismara (2017), entrepreneurial finance is very segmented, especially by source of financing by which entrepreneurs obtain their funds. A common belief about the financing of business start-ups is that they are primarily financed by equity. Several empirical studies on entrepreneurial firms' datasets show bank financing is an important source of financing for new businesses (Robb and Robinson, 2014; Coleman et al., 2016). Moreover technological innovation and new behaviors of capital providers affect the way new ventures are funded. In France, banks are beginning to create incubators or accelerators, to lend money to new or nascent innovative projects, to take a share of equity capital of new ventures, and to implement different types of partnerships with equity crowdfunding platforms or private incubators. Within the context of digital finance and the increase of early stage financing needs, this theoretical research aims at discussing this new banks' strategies and relevant areas of further research on the role of bank financing and relationship for nascent and new entrepreneurial firms, namely start-ups. The main question addressed concerns the sustainability of these strategies and their bearing on the future growth of start-ups.

Keywords: bank financing; debt-equity ratio; funding cycle; start-up financing; Uncertainty (search for similar items in EconPapers)
Date: 2018
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Published in Wolpertinger Conference, 2018, Modena, Italy. pp.17

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01911934

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