Who Finances Startups in the USA? A Comprehensive Study of Informal Investors, 1999-2003

10 Pages Posted: 1 Mar 2011  

William D. Bygrave

Babson College - Arthur M. Blank Center for Entrepreneurship

Paul D. Reynolds

Florida International University, Eugenio Pino & Family Global Entrepreneurship Center

Date Written: 2006

Abstract

We examine the informal investment1 in the U.S.A. during the period 1999-2003. We develop models that correlate informal investment with income, net worth, age, education level, gender, whether or not an investor is also an entrepreneur, and residency of the investor (e.g., rural versus urban). The dependent variables are (1) Whether or not a person is an informal investor, and (2) Amount of informal capital an individual invests per year. The data set comprises 22,292 household interviews from the annual Global Entrepreneurship Monitor (GEM) study in the U.S.A. over the period 1999 and 2003. We believe our findings are useful for entrepreneurs looking for informal investment; policy makers seeking to stimulate informal investment; and professionals such as accountants, lawyers, financial advisors, and educators dealing with entrepreneurs and informal investors.

Keywords: Entrepreneurship

JEL Classification: M13

Suggested Citation

Bygrave, William D. and Reynolds, Paul D., Who Finances Startups in the USA? A Comprehensive Study of Informal Investors, 1999-2003 (2006). Babson College, Babson Kauffman Entrepreneurship Research Conference (BKERC), 2002-2006. Available at SSRN: https://ssrn.com/abstract=1768163

William D. Bygrave (Contact Author)

Babson College - Arthur M. Blank Center for Entrepreneurship ( email )

231 Forest Street
Babson Park, MA 02457-0310
United States

Paul D. Reynolds

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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