Date of Award


Document Type


Degree Name

Doctor of Philosophy (PhD)

Legacy Department

Policy Studies

Committee Chair/Advisor

Gartner, William B.

Committee Member

Plummer , Larry

Committee Member

Alexander, Jr. , John C.

Committee Member

Haller , William J.


In this dissertation I investigate start-up financing by nascent entrepreneurs in the United States between 2005 and 2010. By nascent entrepreneur, I mean individuals who are in the process of creating a new business, but the business itself is not yet affecting prices and quantities in the market. Nearly all research on financing has focused on established firms. Little work, however, has been done on how entrepreneurs acquire and use financial resources during the earliest stages of the firm creation process. The availability of financial resources has been linked to firm growth and survivability, and understanding how entrepreneurs use and acquire money is critical to understanding new firm creation.
Two theories on entrepreneurial risk, introduced by Joseph Schumpeter and Frank Knight, frame this study. These theories offer differing explanations as to who bears the risks of entrepreneurship - whether it is borne by those providing financial capital, or by the entrepreneurs themselves. I address this difference by examining the financing behavior nascent entrepreneurs. Specifically, I introduce three groups of nascent entrepreneurs, categorized by the amount of financial resources used and acquired to create a new venture. The three groups are non-financers who use $0 - $500; average-financers who use an amount near the mean of $24,077; and macro-financers who use $230,000 - $27.5 million. Chapter 1 looks at whether the amount of money affects the likelihood of nascent entrepreneurs starting a new firm, or disengaging from the process. Chapter 2 investigates the sources of start-up financing, and whether nascent entrepreneurs bear the risks of entrepreneurship. Chapters 3 and 4 examine the two outlier groups of nascent entrepreneurs - non-financers and macro-financers.
Results indicate that nascent entrepreneurs do bear the initial risks of entrepreneurship, before external financiers participate in the start-up process. Over 90% of individuals starting businesses in the U.S. use personal savings to finance their nascent ventures. Financing from external-formal sources, such as banks, is more likely to be acquired later in the process. Contrary to findings from many studies on start-up financing, I find that personal characteristics of the entrepreneur (e.g., sex, race, educational attainment, and experience) do affect the likelihood of acquiring both formal and informal sources.
Interestingly, macro-financers and non-financers start new firms at roughly the same rate, yet there is no standard type of firm created by each group. Nascent entrepreneurs within these groups have varying levels of experience, come from varying demographics, and start different types of firms using different types of resources. My investigation into these two outlier groups reveals that while traditional Knightian views on risk and uncertainty are supported, the risks of entrepreneurship may have as much to do with matching the right resources to the right opportunity as they do with calculating risk between entrepreneurs and financiers.



To view the content in your browser, please download Adobe Reader or, alternately,
you may Download the file to your hard drive.

NOTE: The latest versions of Adobe Reader do not support viewing PDF files within Firefox on Mac OS and if you are using a modern (Intel) Mac, there is no official plugin for viewing PDF files within the browser window.