Does informal risk capital relax the financial constraints of high-tech entrepreneurial ventures?

This work analyses the effect of informal risk capital financing on a firm's investment/cash flow sensitivity (ICFS) in a sample of 498 Italian privately held high-tech entrepreneurial ventures (HTEVs) observed from 1996 to 2008. To detect financial constraints, we resort to an error correction model (ECM). We find that the receipt of informal risk capital in the seed stage results in reduced ICFS, indicating a persistent relaxation of financial constraints.

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Year of publication:	2014
Authors:	Colombo, Massimo G. ; Croce, Annalisa ; Guerini, Massimiliano
Published in:	Applied Economics Letters. - Taylor & Francis Journals, ISSN 1350-4851. - Vol. 21.2014, 5, p. 335-339
Publisher:	Taylor & Francis Journals

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Extent:	text/html
Type of publication:	Article
Source:	RePEc - Research Papers in Economics

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