Edited by David Smallbone, Markku Virtanen and Arnis Sauka
Chapter 9: The capitalisation of new firms: exploring the influence of entrepreneurial characteristics on start-up finance
This chapter is concerned with understanding those human capital factors which predict higher or lower levels of start-up financing. The government agencies and authorities devote substantial amounts of resources to promoting and assisting start-up businesses in the United Kingdom (UK), and beyond. To the extent that undercapitalisation associates with poorer survival prospects, appreciating the non-financial factors influencing capitalisation ought to better inform interventions. The data used are from a large-scale survey of UK small and medoium-sized enterprises (SMEs). The results show that financial qualifications or training, habitual entrepreneurs and exporting firms all have higher amounts of start-up finance. The results also show that female-led businesses have lower start-up finance compared to male-led businesses. Taken together, the results suggest that policy-makers should be focused on developing human capital, or entrepreneurial characteristics, rather than attempting to push more money into markets.
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