Start-up and Growth Financing
Knowledge of financing strategies as well as the function and mechanism of different financing instruments is necessary to recognize and counteract in good time threatening financing crises and liquidity bottlenecks. Within this context, special importance should be attached to the optimization of the capital and risk structure during the phases of start-up and growth. The result of having low-equity equipment is often low economic strength (as became apparent, for example, in the large number of insolvencies of young enterprises during the period from 2000 to 2002 when the “new economy bubble” burst) [Rovenpor (2004)]. Numerous young enterprises had promising business models at their disposal, yet the main reasons for their insolvencies were financing problems which they were unable to resolve. The founders were in many cases not in a position to obtain external capital for overcoming the crisis and to manage their payment flows effectively. For example, for the US venture capital market, which is the world 's largest, data from the National Venture Capital Association show that back in 2000 US VC companies had provided more than 100 billion USD while by 2003 the investment volume dropped below 20 billion USD [www.nvca.org; cf. also Timmons/Spinelli (2004)].
KeywordsVenture Capital Initial Public Offering Private Equity Equity Capital Equity Financing
Unable to display preview. Download preview PDF.
Financing – standard works
Financing and Entrepreneurship
- Berger, A. N./Udel, G. F. (2003): Small business and debt finance, in: Acs, Z. J./Audretsch, D. B. (eds.), Handbook of entrepreneurship research – an interdisciplinary survey and introduction, Boston et al. 2003, pp. 299–330.Google Scholar
- Bhidé, A.. (1999): Bootstrap Finance: the Art of Start-ups, in: Sahlman, W. A./Stevenson, H. H ./Roberts, M. J./ Bhidé, A. (eds.) The Entrepreneurial Venture, 2nd issue, 1999, pp. 223–237.Google Scholar
- Gompers, P./Lerner, J. (2003): Equity financing, in: Acs, Z. J./Audretsch, D. B. (eds.), Handbook of entrepreneurship research – an interdisciplinary survey and introduction, Boston et al. 2003, pp. 267–298.Google Scholar
- Shepherd, D. A./Douglas, E. J. (1999): Attracting equity investors: positioning, preparing and presenting a business plan, Thousand Oaks et al. 1999.Google Scholar