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Who Funds Technology-Based Small Firms? Evidence From Belgium

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Author Info
A. Bozkaya
B. Van Pottelsberghe De La Potterie

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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% 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 a change 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.

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File URL: http://www.informaworld.com/openurl?genre=article&doi=10.1080/10438590701279466&magic=repec&7C&7C8674ECAB8BB840C6AD35DC6213A474B5
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Publisher Info
Article provided by Taylor and Francis Journals in its journal Economics of Innovation and New Technology.

Volume (Year): 17 (2008)
Issue (Month): 1-2 ()
Pages: 97-122
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Handle: RePEc:taf:ecinnt:v:17:y:2008:i:1-2:p:97-122

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Related research
Keywords: Venture capital; Technology-based firms; Ownership structure;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Antonelli Cristiano & Teubal Morris, 2008. "Venture capital as a mechanism for knowledge governance : new markets and innovation-led economic growth," Dipartimento di Economia "S. Cognetti de Martiis" LEI & BRICK - Laboratorio di economia dell'innovazione "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio Carlo 200805, University of Turin. [Downloadable!]
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