Work

Where Does the Money Come From? The Financing of Small Entrepreneurial Enterprises

Year: 1998

Type: preprint

Abstract: Using data from the Wisconsin Entrepreneurial Climate Study, we study the sources of firms’ finance during the very early stages of their lives. Our focus is the evolution of the mix of financial capital from “insiders” and “outsiders” as firms age. We find that at the beginning of firms’ life cycles, the proportion of funds from internal sources increases with age, while the proportion from banks, venture capitalists, and private investors declines. There is also evidence that these patterns eventually reverse themselves, with the proportion of insider finance ultimately declining and the proportion of outsider finance increasing with age. We argue that these findings are consistent with elements of both reputation-based and monopoly-lender theories of firm finance.

Source: RePEc: Research Papers in Economics

Authors: Zsuzsanna Fluck, Douglas Holtz‐Eakin, Harvey S. Rosen

Institutions: Michigan State University, National Bureau of Economic Research, Syracuse University, Ifo Institute for Economic Research, Princeton University

Language: English

Topic: Private Equity and Venture Capital

Subfield: Accounting

Field: Business, Management and Accounting

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1527871140

Cites:

Cited by: 64

Related to: 10