Time is Money. And Timing is Everything: Funding Acquisition Processes of Nascent Ventures

Title: Time is Money. And Timing is Everything: Funding Acquisition Processes of Nascent Ventures

Andrea M. Herrmann (with Lukas Held, Friedemann Polzin, Dimo Dimov)

Abstract: Answering the call for more process-oriented research into the inception and development of companies, this paper analyses the funding acquisition process of nascent ventures. Based on optimal matching techniques combined with multinomial logistic regression, we identify how the most typical funding acquisition processes of nascent ventures evolve and identify in which circumstances ventures pursue the respective processes. First of all, we find standard pattern of founder self-funding that is consistent with predictions standard entrepreneurial finance theory. Secondly, we theorize under which initial conditions the venture deviates from this path. The ambition of the entrepreneur, the degree of innovativeness and the nature product determine which funding sequence is chosen. With this study we first show the importance of initial venture strategy (imprinting) for the further resource acquisition and corresponding venture development process and secondly introduce the optimal matching technique to the realm of the entrepreneurship literature.

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