Tuesday, March 17, 2020

Literature review on entrepreneurial finance The WritePass Journal

Literature review on entrepreneurial finance Introduction Literature review on entrepreneurial finance IntroductionResearch ProposalBackgroundBank FinanceFinancing PreferencesStudy Aims and ObjectivesResearch StatementResearch QuestionsRelated Introduction Research Proposal Although it appears to be contentious whether availability of finance impacts on entrepreneurial entry to markets (Kim et al., 2006, p. 5), it is likely to be a critical factor in determining the early success or failure of any new start-up venture. What is more, it has also been implicated as an important factor in determining the ongoing success of the business (Marlow Patton, 2005, p. 717; Capelleras et al., 2008, p. 688). The literature would also appear to indicate that the balance between the availability to and uptake by entrepreneurs of different forms of finance may have wider effects on the national economy (Deidda Fattouh, 2008, p. 6). Therefore it may be important to gain a better understanding of the level of availability of different forms of finance to start-up ventures, along with different factors affecting their uptake by entrepreneurs. Background This section of the proposal provides a brief overview of the literature on the different financing options available to start-up ventures, focusing on bank finance and venture capital. Bank Finance There is a lack of recent research available as to trends in funding of entrepreneurs in The Netherlands. Understanding of such trends in other countries, where extensive research has taken place in the field of entrepreneurial finance, could result in the understanding as well as the applicability of general findings to The Netherlands and any other country. Evidence confirms that banks continued to provide a major source of finance for SMEs in the 1990s (Hughes, 1997, p. 151) although it would be expected that the recent financial crisis could have impacted this (Udell, 2011, p. 103). While relaxing financial constraints may allow greater access to bank financing for entrepreneurs, it may also encourage excessive entry to the market and may also undermine bank-monitoring incentives according to Arping et al. (2010, p. 26). Evidence from developing nations such as South Africa suggest that access to formal bank financing is likely to be a determinant of start-up rates in any given region (Naude et al., 2008, p. 111). There was however, little consideration in this paper as to whether availability of venture capital had any moderating effect on this relationship, and other sources suggest that this may be less important than availability of human capital (Kim et al., 2006, p. 5). There may not only be issues associated with availability of bank finance, but also access to it. There is some suggestion within the literature that women may be somewhat disadvantaged in securing bank finance when compared to their male counterparts (Marlow Patton, 2005, p. 717; Carter et al., 2007, p. 427). Other authors have disputed this, although it is possible that these differences could be accounted for by different geographical foci (Sabarwal et al., 2009, p. 1). There is also some suggestion that differences may exist between ethnic groups in access to bank finance (Smallbone et al., 2003, p. 291) while other personal characteristics of entrepreneurs could also create barriers (Irwin Scott, 2010, p. 245). The relationship between banks and entrepreneurs could be key to enabling access. Research from Italy suggests that there could be trust issues between young entrepreneurial firms and bank managers. This may be particularly true where there is perceived to be heavy monitoring, and may lead to lower levels of demand for bank financing (Howorth Moro, 2006, p. 495). There is some evidence that the ownership of the bank itself may influence the relationships it forms with businesses of all types, including start-ups. In particular, the evidence suggests that firms are more likely to maintain exclusive relationships with state-owned banks, which may indicate greater levels of trust than compared to foreign or privately owned banks (Berger et al., 2008, p. 37). The literature identifies some strategies that may be effective in helping to overcome these barriers. For example in emerging economies, networking has been implicated as an important strategy in helping small to medium enterprises (SMEs) secure bank financing. This more specifically relates to networking with customers and government officials (Le Nguyen, 2009, p. 867). There is some suggestion that firms in developed countries are more likely to incorporate in order to access formal bank financing (Acs et al., 2008, p. 10). Financing Preferences It has been speculated that young businesses may require more than just monetary input, but also require access to expertise. This argument has been proposed predominantly in the context of technology firms, who may lack experience in research and development. Such businesses may benefit from expertise provided by venture capital firms who possess expertise and skills in this area (Keuschnigg Nielsen, 2005, p. 222). It would however be suggested that this may extend into some other sectors on the basis of research by Kim et al. (2006, p. 5) which found that availability of human capital was instrumental in determining entrepreneurial entry to markets. Quantitative surveys conducted amongst start-up firms has suggested that various characteristics of those ventures may determine the structure and types of finance which are utilized, including size, assets, growth orientation and owner characteristics (Cassar, 2004, p. 261). When selecting venture capital, businesses must consider contracts carefully, as these will have a significant impact on how the firm is able to exit at a later stage (Cumming, 2008, p. 1947). de Bettignies and Brander (2007, p. 808) argue that venture capital may be preferred to bank finance when venture capital productivity is high and entrepreneurial productivity is low. Winton and Yerramilli (2008, p. 51) suggest that there may be different criteria for determining preference, based on preference for risky or safe continuation practices and relative costs associated with finance options. For example, they suggest that if venture capital companies lower their cost of capital, this may entice some entrepreneurs to switch from safe continuation strategies utilizing bank finance, to riskier strategies utilizing venture capital. Study Aims and Objectives It would appear that many of the studies discussed in the previous section have much to contribute to a better understanding of how entrepreneurs select between bank and venture capital financing. However, most have focused on only limited aspects of the issue. A literature review that aims to take a wider perspective may therefore be useful in providing a better understanding of what may be a relatively complex decision-making process. In particular, most of the evidence available has examined the availability and access to bank financing, with much less information available on comparison to venture capital availability and access. Yet contrasting the benefits and limitations of the two may be important in enabling entrepreneurs to make an informed decision when structuring their start-up finance arrangements. Research Statement The research aims to conduct a review of the literature that will enable comparison of benefits and limitations of bank finance and venture capital. Research Questions The following research questions will be addressed by the review:   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Are there differences in the availability of and access to bank financing and venture capital to businesses?   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Does the availability and access to different types of finance impact choices made by entrepreneurs?   Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚  Ã‚   Are there common barriers to bank finance and venture capital or are some barriers specific to one option? When successfully answered, the findings from the previous questions should give answer to the following question by means of a recommendation: Are there any strategies that may enable entrepreneurs to overcome these barriers? References Acs, Z.J., Desai, S. Klapper, L.F. (2008) What does ‘Entrepreneurship’ data really show? A comparison of the global entrepreneurship monitor and world bank group datasets. World Bank Policy Research Working Paper No. 4667. Accessed 13 May 2011, from: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1233043.   Arping, S., Loranth, G. Morrison, A.D. (2010). Public initiatives to support entrepreneurs: Credit guarantees versus co-funding. Journal of Financial Stability, 6(1): 26-35. Berger, A.N., Klapper, L.F., Peria, M.S.M. Zaidi, R. (2008). Bank ownership type and banking relationships. Journal of Financial Intermediation, 17(1): 37-62. Capelleras, J.-L., Mole, K.F., Greene, F.J. Storey, D.J. (2008). Do more heavily regulated economies have poorer performing new ventures? Evidence from Britain and Spain. Journal of International Business Studies, 39(4): 688-704.   Carter, S., Shaw, E., Lam, W. Wilson, F. (2007). Gender, entrepreneurship, and bank lending: The criteria and processes used by bank loan officers in assessing applications. Entrepreneurship Theory and Practice, 31(3): 427-444. Cassar, G. (2004). The financing of business start ups. Journal of Business Venturing, 19(2): 261-283.   Cumming, D. (2008). Contracts and exits in venture capital finance. The Review of Financial Studies, 21(5): 1947-1982.   de Bettignies, J.-E. Brander, J.A. (2007). Financing entrepreneurship: Bank finance versus venture capital. Journal of Business Venturing, 22(6): 808-832. Deidda, L. Fattouh, B. (2008). Banks, financial markets and growth. Journal of Financial Intermediation, 17(1): 6-36. Howorth, C. Moro, A. (2006). Trust within entrepreneur bank relationships: Insights from Italy. Entrepreneurship Theory and Practice, 30(4): 495-517. Hughes, A. (1997). Finance for SMEs: A UK perspective. Business and Economics, 9(2): 151-168. Irwin, D. Scott, J.M. (2010). Barriers faced by SMEs in raising bank finance. International Journal of Entrepreneurial Behaviour Research, 16(3): 245-259. Keuschnigg, C. Nielsen, S.B. (2005) ‘Public policy for start-up entrepreneurship with venture capital and bank finance’. In V. Kanniainen C. Keuschnigg (Eds.) Venture Capital, Entrepreneurship, and Public Policy. Cambridge, MA: The MIT Press, pp. 221-250.   Kim, P.H., Aldrich, H.E. Keister, L.A. (2006). Access (not) denied: The impact of financial, human, and cultural capital on entrepreneurial entry in the United States. Small Business Economics, 27(1): 5-22. Le, N.T.B. Nguyen, T.V. (2009). The impact of networking on bank financing: The case of small and medium-sized enterprises in Vietnam. Entrepreneurship Theory and Practice, 33(4): 867-887.   Marlow, S. Patton, D. (2005). All credit to men? Entrepreneurship, finance, and gender. Entrepreneurship Theory and Practice, 29(6): 717-735.   Naude, W., Gries, T., Wood, E. Meintijies, A. (2008) Regional determinants of entrepreneurial start-ups in a developing country. Entrepreneurship Regional Development, 20(2): 111-124.   Sabarwal, S., Terrell, K. Bardasi, E. (2009). How do Female Entrepreneurs Perform? Evidence from Three Developing Regions. World Bank. Accessed 15 May 2011, from: http://siteresources.worldbank.org/INTGENDER/Resources/336003-1240628924155/Sabarwal_Terrell_Bardasi_Entrep_All_CWE.pdf. Smallbone, D., Ram, M., Deakins, D. Aldock, R.B. (2003). Access to finance by ethnic minority businesses in the UK. International Small Business Journal, 21(3): 291-314. Udell, G.F. (2011). SME financing and the financial crisis: A framework and some issues. In G. Calcagnini I. Favaretto (Eds.) The Economics of Small Businesses: An International Perspective. London: Springer Heidelberg, pp. 103-113.   Winton, A. Yerramilli, V. (2008). Entrepreneurial finance: Banks versus venture capital. Journal of Financial Economics, 88(1): 51-79.

Sunday, March 1, 2020

The Day My Dad Didnt Make it Home from Work - by Marianne Worley, Business Writing Consultant at The Essay Expert

The Day My Dad Didnt Make it Home from Work - by Marianne Worley, Business Writing Consultant at The Essay Expert [Reposted with the permission of the very talented business/marketing writer Marianne Worley, consultant at The Essay Expert. This poignant story was originally posted on her blog, Marketing Matters and Other Stories. I didnt even have to think before asking her if I could post it to The Essay Experts blog on Memorial Day.] The day was Monday, April 21, 2008. My phone rang just after 9pm. I checked the caller ID–it was my brother Nolan. Instinctively, I knew something was wrong, very wrong. My Dad had been in an accident and was being taken to a hospital about 20 miles north of my house. We didn’t know anything more. I quickly got dressed, jumped in my car, and hit the gas pedal. About 5 minutes later, my brother called again. Now Dad was being transported by helicopter to the much larger hospital just a few miles from my house. I got off the freeway and drove back the other way. My brother, sister-in-law, and I arrived at the hospital around the same time. The helicopter was still in flight, so we staked out seats in the busy emergency room to wait, still perplexed about what had happened to our Dad. After my stepmom and sister rushed in, we learned the whole story. My Dad usually came home from work around 5 or 6, so when it started to get dark and he still wasn’t home, my stepmom picked up the phone to make some increasingly frantic calls. My Dad was notorious for sporadically answering cell calls. As a contractor, he was constantly breaking and losing mobile phones. She wasn’t surprised when he didn’t answer, so she dialed his friends and clients. He had left the job site hours earlier, but no one knew where he was. My stepmom and sister decided to drive to the job site to look for him. They found his empty work truck on the side of the road with the driver’s side door open. They called 911 and nearby friends who could help with the search. There was a small creek parallel to the road with a steep bank covered in thick, muddy vegetation. My athletic sister charged down the hill and found him lying unconscious in the creek, pale and covered with dirt. The paramedics pulled him up on a rescue stretcher and loaded him into the helicopter. This process doesn’t take a few minutes, like it does on TV and in the movies. The rescue actually took more than an hour. The helicopter finally arrived, but still we knew nothing about his condition. We assumed it was a stroke, or something similar. When they finally let us in to see him, we discovered that he had suffered some sort of episode, possibly a seizure, and was experiencing pronounced weakness on one side of his body. It looked like a stroke, but he was stable. So they admitted him and scheduled an MRI for the next morning. The following day, the doctors confirmed that the MRI results showed that it looked like a stroke. We felt relieved. We knew a brain tumor would be a much more deadly diagnosis. But they still wanted to get a new MRI, with contrast, the next day to be sure. On Wednesday, April 23, 2008, our lives changed forever. The new MRI showed that it wasn’t a stroke–it was a brain tumor. They called in a neurosurgeon for a consultation. My education in neurology commenced that day. I carried a notebook at all times. I scribbled down details from the doctors during the day and did online research at night. Over the next 7 months, my Dad had a biopsy and was diagnosed with glioblastoma multiforme, the most aggressive form of brain cancer. Our doctor decided to treat with radiation and chemotherapy, not surgery. I knew that without surgery, the 6-month survival rate was almost zero. When I pressed him, he said he could do the surgery if we got a second opinion from one of the neurosurgeons he recommended. After many phone calls, I got an appointment with one of the top experts in the country at Cedars-Sinai in Los Angeles. The neurosurgeon just needed to see my Dad’s (now enormous) medical file, along with all of his MRI results. We got his opinion, and my Dad had surgery to remove the tumor. Although the surgery was successful, he still needed radiation and chemo to stave off regrowth, which is incredibly common. I researched clinical trials and spoke to doctors at UCLA and UC San Francisco. My Dad didn’t qualify for any trials and his prognosis was grave. By September, the tumor was back, bigger than before. We tried some experimental chemo drugs, but nothing helped. My Dad wasted away before our eyes, until we finally called in hospice care in November. On December 3rd, the hospice nurse told us that the end was near, so we gathered together to say goodbye. We stayed up pretty late, but finally succumbed to our own fatigue and reluctantly went to bed. Just before 4:30am, I awoke suddenly and sat bolt upright. I went downstairs and the nurse told me she had just checked on my Dad–he was still hanging in there. When I went to his bedside, I touched his hands and face. I didn’t think he was breathing, so I woke up my stepmom, who had decided to take a quick nap just minutes before. He was gone. We all gathered around his bed and cried again. A week or so later, my sister Whitney and I, always the Daddy’s-Little-Girl types, decided to get tattoos to celebrate our Dad’s life. She got an elegant â€Å"W† and I got an infinity sign with a â€Å"W† in the middle. Worley forever. My Dad was never called to battle in Vietnam, but that doesn’t mean he didn’t fight a war. So on this Memorial Day, I remember all who have fallen in war, including the continuing war on cancer. ____________________ I haven’t met anyone who hasn’t been touched in some way by cancer. The next time you’re thinking about making a cash donation to a charity, please consider one of the organizations in the fight against cancer, including the American Brain Tumor Association. Thanks for reading this very personal story. I’m sharing it because it shaped who I am today. Many thanks to my fellow blogger The JackB–his post from yesterday inspired me to write this. I haven’t met anyone who hasn’t been touched in some way by cancer. The next time you’re thinking about making a cash donation to a charity, please consider one of the organizations in the fight against cancer, including the American Brain Tumor Association. Category:UncategorizedBy Brenda BernsteinMay 31, 2011 8 Comments Nancy Anderson says: May 31, 2011 at 12:50 pm What a beautiful story. I too lost my dad to cancer and as I read your words, I could feel myself going through the same feelings, thoughts and anguish. God bless your father and your family. Thank you for sharing your story with us. Log in to Reply The Essay Expert says: May 31, 2011 at 1:55 pm Youre very welcome Nancy. This was Mariannes story. My father died 14 years ago after a week-long battle with pneumonia, so Mariannes piece spoke loudly to me. Im so glad it is being appreciated. Log in to Reply Alejandra Leiva says: October 6, 2016 at 10:43 am Hi The Essay Expert, I was wondering how I can submit a question about some words. Here I have one: Do we stand in the snow or on the snow? Log in to Reply Brenda Bernstein says: October 6, 2016 at 11:12 am Hi Alejandra! If you are standing on top of the snow, in snow shoes or skis for instance, you would be standing on the snow. If you are waist-deep in snow you would be standing in the snow. Or if you are in a snowstorm you would be in the snow. I hope that helps! Log in to Reply Alejandra Leiva says: October 6, 2016 at 4:27 pm Awesome that helps a lot! Could you help me with another question? Which of these is correct? Or what do they mean? count with me count on me Brenda Bernstein says: October 22, 2016 at 6:54 am Count on me means you can rely on me. Count with me would mean something like count to 10 with me! The Essay Expert says: May 31, 2011 at 1:55 pm So true Pedro. Even a week-long battle, like the one my father fought, is a battle indeed. Log in to Reply The Essay Expert says: May 31, 2011 at 4:40 pm Thank you Jan. Its amazing how many this disease has touched. My heart goes out to you. Log in to Reply