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Informal and Early Formal Financial Support in the Business Creation Process: Exploration with PSED II Data Set

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  • Paul D. Reynolds

Abstract

The sequence, amounts, and timing of informal and formal support for emerging firms, as well as the impact on start‐up outcomes, continue to be a central issue. Tracking reports from a national representative sample of nascent enterprises indicates that average amount of informal support is $48,000: formal support, provided after the nascent enterprise has become a legal entity, averages about $200,000. There is little relationship between the informal support and outcomes (new firm, continuing start‐up effort, or quit) and informal support, but virtually no cases reporting discontinuation report any formal financial support. Over 75 percent of the total funding is provided to initiatives that have not yet become new firms.

Suggested Citation

  • Paul D. Reynolds, 2011. "Informal and Early Formal Financial Support in the Business Creation Process: Exploration with PSED II Data Set," Journal of Small Business Management, Taylor & Francis Journals, vol. 49(1), pages 27-54, January.
    • Handle: RePEc:taf:ujbmxx:v:49:y:2011:i:1:p:27-54
    DOI: 10.1111/j.1540-627X.2010.00313.x
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    Cited by:

    1. Aleksandra Gawel & Timo Toikko, 2023. "Quality of Governance and Welfare Generosity as Institutional Predictors of Entrepreneurship: European Perspective," SAGE Open, , vol. 13(4), pages 21582440231, October.
    2. Shahid, Pirzada Syed Rizwan, 2023. "Founder's Human Capital and the Entrepreneurial Process Duration," OSF Preprints yf6mg, Center for Open Science.
    3. Christian Hopp & Gernot Pruschak & Michel Krebs, 2024. "Are corporate affiliations conducive to nascent entrepreneurship?," International Entrepreneurship and Management Journal, Springer, vol. 20(3), pages 2241-2262, September.

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