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Start-Ups and External Equity: The Role of Entrepreneurial Experience

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Abstract

Interest in entrepreneurship has increased dramatically over the last two decades. Because of the role that entrepreneurship plays in economic development, an understanding of the financing of business start-ups is essential. A long-standing problem for many business start-ups is acquiring external equity during the first year of operations. This paper analyzes the determinants of obtaining external equity. Special consideration is given to the role of entrepreneurial experience. The results suggest that entrepreneurial experience impacts a start-up's ability to obtain external equity.

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Acknowledgements

The author is grateful to James Giordano and two anonymous referees for their helpful comments and suggestions and to the Kauffman Foundation for granting public access to the Kauffman Firm Survey. Certain data included herein are derived from the Kauffman Firm Survey release 3.1. Any opinions, findings, and conclusions or recommendations expressed in this material are those of the author and do not necessarily reflect the views of the Ewing Marion Kauffman Foundation.

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  1. Peter A Zaleski
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*Peter A. Zaleski is a professor of Economics at the Villanova School of Business, Villanova University, received his Ph.D. in Economics with a concentration in Industrial Organization from the University of Maryland. His research on related areas has been published in Review of Industrial Organization, Journal of Economics and Business, and Public Finance Review.

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Zaleski, P. Start-Ups and External Equity: The Role of Entrepreneurial Experience. Bus Econ 46, 43–50 (2011). https://doi.org/10.1057/be.2010.41

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  • DOI: https://doi.org/10.1057/be.2010.41

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