The financing of business start-ups

This article investigates the determinants of capital structure and types of financing used around business start-ups utilizing a survey that reduces the confounding effects of survivorship bias. In particular, the influence of start-up size, asset structure, organization type, growth orientation, and owners' characteristics are examined both in the choice and in the magnitude of finance use. The results are consistent with the theoretical models incorporating issues, such as information asymmetries, agency theory, and transaction costs. The results also demonstrate linkages among providers of finance, maturity of assets, and the capital structure of start-ups. While the results provide insights into business finances near the time of creation, some recommendations for future research are discussed. (C) 2003 Elsevier Inc. All rights reserved.