The Familiarity of Small Technology-Based Business Owners with Sources of Capital: Impact of Location and Capitalization

Abstract

<p>This paper examines issues related to the acquisition of capital by a sample of 142 small technology-based firms. Specifically, the study investigates the relationship between owners of small technology-based firms' familiarity with the alternative sources of capital and (I) location of the business and (2) amount of capital raised by the business. The results show that familiarity with alternative sources of capital is affected by the location of the business and amount of capital raised by the company.</p> <p>The results have several implications affecting small business owners, providers of capital, and policy-makers. First, many small business owners are relatively unfamiliar with many sources of capital that are used to fund growth. Second, owners of small technology-based firms indicate low familiarity with government financing programs. Third, owners of small technology-based firms in smaller communities are less familiar with sources of capital commonly used to finance growth. Fourth, owners of small technology-based firms are relatively unfamiliar with methods of bootstrap financing.</p>