Young businesses, especially in the technology sector, are the backbone in facilitating the creation of innovative new ventures as well as strengthen the development of existing organizations and as a result, increasing national economic growth. One of the most important decisions the founders of these technology start-ups have to make is the financial one. With new emerged sources of funding, this decision gets even more complex and old guidelines are not very helpful anymore. The new introduced financial framework, which is based on the financial decisions of four case companies will assist entrepreneurs when it comes to the question where capital can be found and which source of funding is the most suitable one for his or her venture.
Table of Contents
1. INTRODUCTION
1.1. BACKGROUND & PROBLEM FORMULATION
1.2. PURPOSE & RESEARCH QUESTION
1.3. LIMITATIONS
1.4. STRUCTURE
2. LITERATURE REVIEW
2.1. THEORETICAL BACKGROUND
2.1.1. STAGES OF FINANCIAL NEED
2.1.2. MOST COMMON FINANCING OPTIONS
2.2. EMPIRICAL EVIDENCE
2.3. DTI FRAMEWORK
3. METHODOLOGY
3.1. RESEARCH DESIGN
3.2. COLLECTION OF DATA
3.2.1. SECONDARY EMPIRIC DATA - CASE STUDY APPROACH
3.2.2. SECONDARY EMPIRIC DATA – BRIEF INTRODUCTION TO THE CASE STUDIES
3.2.3. SECONDARY EMPIRIC DATA – HOW THE CASE STUDIES ARE ANALYSED?
3.2.4. SECONDARY EMPIRIC DATA – SCIENTIFIC LITERATURE
3.3. VERIFICATION AND GENERALIZATION OF EMPIRICAL DATA
3.3.1. VALIDITY
3.3.2. RELIABILITY
3.4. GENERALISATION OF CASE STUDIES
4. RESEARCH FINDINGS & DISCUSSION
4.1. JUST PARK
4.2. LANDBAY
4.3. KANO COMPUTING
4.4. DOJO LIMITED
4.5. DISCUSSION
4.5.1. EXTERNAL FUNDS REALLY NEEDED?
4.5.2. IS A GRANT A POSSIBILITY?
4.5.3. HIGH-CLASS MANAGEMENT TEAM OR EARLY TRACTION?
4.5.4. IS YOUR BUSINESS ABLE TO CREATE MOMENTUM?
4.5.5. IS YOUR BUSINESS IN A HIGH GROWTH SECTOR?
4.5.6. ARE YOU WILLING TO SHARE CONTROL?
4.5.7. DO YOU NOT ONLY NEED MONEY?
4.5.8. DO YOU HAVE THE SECURITIES TO GET A BANK LOAN OR OVERDRAFT?
4.6. OUTCOME: THE FINANCING FRAMEWORK
4.7. FURTHER REMARKS
5. CONCLUSION
5.1. WHICH KIND OF FINANCING IS NEEDED IN THE DIFFERENT STAGES OF A START-UP BUSINESS?
5.2. WHAT SOURCES OF FUNDS ARE AVAILABLE FOR TECHNOLOGY START-UPS?
5.3. WHAT SOURCES OF FUNDS ARE USED IN THE REAL WORLD?
5.4. HOW TO IMPROVE AN EXISTING FINANCING FRAMEWORK TO MAKE DECISION MAKING EASIER?
5.5. LIMITATIONS
5.6. FINAL REMARKS
Research Objectives and Core Topics
The primary objective of this dissertation is to examine funding sources for UK-based technology start-ups during their seed and initial start-up phases. By integrating existing academic theory with empirical case study analysis, the work identifies the gap between traditional financing models and the practical requirements of modern technology ventures, ultimately aiming to provide a refined financing framework for entrepreneurs.
- Analysis of traditional versus emerging financing sources (e.g., crowdfunding, accelerators).
- Evaluation of financial decision-making processes from the entrepreneur's perspective.
- Application of the DTI financing framework to real-world technology companies.
- Development of an improved, actionable financing framework for technology founders.
- Examination of the importance of non-monetary support like mentorship and professional networks.
Excerpt from the Book
4.5.1. External funds really needed?
Before an entrepreneur decides to raise capital from external sources, it is crucial to answer the question about the real need. This is especially the case for young technology companies in an early stage, because external financing, if available, will be in most of the cases very expensive. In other words: the founders have to give up a lot of equity to reimburse investors for the risk (Burns, 2007). This issue can be bypassed with the help of two main actions applied by the case companies: First, applying own funds or bootstrapping, as seen by the founder of Just Park. Anthony Eskinazi used his own money before applying to a corporate accelerator to get his first trance of seed funding. This enabled him to increase the value of his company in the first place and to get a better deal afterwards. On the other hand, this approach is often risky, because it involves the investment of the founder’s own money, which will be completely gone if the business is going to fail. Second, there is the possibility to acquire funds through family and friends. This financing round can be from internal or external nature, depending on the structure and terms related to the capital, but the main advantage here is, that in most of the cases the valuation will be superior compared to professional money such as an angel investment or venture capital. The downturn with money from family and friends is often the social pressure, especially when the start-up fails. These findings are supported by the literature reviewed in this paper (Berger & Udell, 2006). As a result the first question to answer in the improved framework is:
Summary of Chapters
1. INTRODUCTION: Outlines the importance of start-ups for economic growth and identifies the research gap regarding the entrepreneur's perspective on funding sources.
2. LITERATURE REVIEW: Discusses the financial life cycle of start-ups, traditional funding options, and introduces the government's DTI framework.
3. METHODOLOGY: Details the use of a multiple case study approach involving four UK technology companies to test and refine existing financing theories.
4. RESEARCH FINDINGS & DISCUSSION: Presents empirical data from four cases and develops an improved financing framework based on eight critical decision-making questions.
5. CONCLUSION: Summarizes findings, answers the central research questions, and acknowledges limitations while suggesting paths for future research.
Keywords
Technology Start-ups, Venture Capital, Business Angels, Crowdfunding, Accelerator Programs, Seed Funding, UK Business Environment, Entrepreneurial Finance, Financial Framework, Equity Financing, Debt Financing, Bootstrapping, Small and Medium Sized Enterprises, Capital Structure, Financial Decision Making.
Frequently Asked Questions
What is the core focus of this research?
This work examines how UK-based technology start-ups navigate the funding landscape during their earliest stages, specifically looking at how they select and acquire capital.
Which specific themes are addressed in this paper?
The paper covers the financial life cycle of companies, various internal and external funding sources, the role of government support, and the necessity of aligning financing strategies with business goals.
What is the ultimate goal of the thesis?
The main goal is to create an advanced, practical financing framework for technology founders by adapting the traditional DTI government model to include contemporary sources like crowdfunding and accelerators.
Which scientific methodology is employed?
The research uses a qualitative multiple case study approach, utilizing secondary data from company reports, business plans, and databases like CrunchBase to analyze real-world financing trajectories.
What topics are explored in the main body of the work?
The main body investigates the stages of financial need, compares theoretical models against four specific case companies (Just Park, Landbay, Kano, and Dojo), and discusses the strategic choices founders face when seeking capital.
Which keywords define the scope of the paper?
Key terms include technology start-ups, venture capital, business angels, equity crowdfunding, accelerator programs, and the DTI financing framework.
How does the author define the research gap?
The author identifies that existing academic research focuses heavily on the supply side (investors) rather than the entrepreneur's perspective on making the right financial decisions.
How is the DTI framework specifically improved?
The author improves the model by incorporating modern financing realities, such as the vital roles played by accelerators, crowdfunding, and non-monetary benefits like mentorship and professional networking.
- Citar trabajo
- Patrick Renner (Autor), 2015, Financing of Start-ups. A financing framework for technology start-ups in the UK for the seed & start-up round, Múnich, GRIN Verlag, https://www.grin.com/document/451790
