A high-tech start-up's debt financing strategy: Implications for valuing soft information

Artikel

How does entrepreneurial financing differ from traditional financing? This study sheds new light on this central question of entrepreneurial finance literature by exploring the distinctive role of soft information in a high-tech start-up's debt financing. Entrepreneurial investors can obtain soft information from strong relationships with potential investees and use the information to evaluate and select promising investees. Using a dataset on 683 SBA 7(a) loan activities involved with information technology based start-ups, this study provides empirical evidence that high-tech start-ups tend to experience a lower rate of default if they are located close to the lending banks and the lending banks are of considerable size. These conditions allow the lending banks to collect and utilize soft information regarding high-tech start-ups in an efficient manner.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Journal: The Journal of Entrepreneurial Finance (JEF) ; ISSN: 1551-9570 ; Volume: 19 ; Year: 2017 ; Issue: 2 ; Pages: 1-18 ; Montrose, CA: The Academy of Entrepreneurial Finance (AEF)

Classification and Topics

• Classification: Management ; Asymmetric and Private Information; Mechanism Design ; Information and Market Efficiency; Event Studies; Insider Trading ; Entrepreneurship
• Subject: high-tech start-up ; entrepreneurial finance ; debt financing ; soft information ; SBA

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Kang, Hyunsung D.
• Event: Veröffentlichung
• (who): The Academy of Entrepreneurial Finance (AEF)
• (where): Montrose, CA
• (when): 2017

Further information

• Handle: http://hdl.handle.net/10419/197545
• Last update: 10.03.2025, 11:44 AM CET