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

28 Pages Posted: 3 Jan 2011

See all articles by Paul D. Reynolds

Paul D. Reynolds

Florida International University, Eugenio Pino & Family Global Entrepreneurship Center

Date Written: December 29, 2010

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

Reynolds, Paul D., Informal and Early Formal Financial Support in the Business Creation Process: Exploration with PSED II Data Set (December 29, 2010). Journal of Small Business Management, Vol. 49, Issue 1, pp. 27-54, 2010. Available at SSRN: https://ssrn.com/abstract=1733779 or http://dx.doi.org/10.1111/j.1540-627X.2010.00313.x

Paul D. Reynolds (Contact Author)

Florida International University, Eugenio Pino & Family Global Entrepreneurship Center ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

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