An Investigation of Start-Up Outcomes Over Time : Does Start-Up Capital Structure

Given that the type of financing available during the earliest phases of the new firm founding process can influence the likelihood of venture success or failure, start-up capital structure in nascent ventures is a topic of important and timely theoretical and practical relevance. This research explores the relationship between start-up capital structure and time to start-up outcomes consistent with Pecking Order Theory. In addition, we examine why some start-up financial models enable a particular outcome resolution faster than others in the nascent context. We hypothesize certain forms of start-up capital will attenuate or accelerate the incidence of either new firm founding or disbanding. In general, we find that as team size increases the proportion of debt and equity utilized increases; the percentage of personal funds decreases if start-ups aspire to maximize growth; greater percentages of debt financing decrease the incidence of quitting; greater percentages of equity financing had the most impact on the time to new firm founding; greater percentages of debt funds influenced the time to new firm founding; and greater percentages of personal funding accelerated the time to new firm founding. Limitations, considerations, and suggestions for further research are discussed