Financing Small Technology-Based Companies: The Relationship between Familiarity with Capital and Ability to Price and Negotiate Investment

This study examines the financing of small technology-based firms. Specifically, the study investigates the familiarity of owners of small technology-based firms with alternative forms of capital by stage of development and in comparison with their ability to price and negotiate external equity and debt investment. The results indicate that owners are most familiar with traditional sources of capital, somewhat less familiar with capital commonly used to fund growth, and least familiar with government funding initiatives. Owners believe that they are better able to negotiate than to price equity and debt. The perceived ability to negotiate and price externally funded investments increases as the firm matures through the various stages of development.