How do insiders affect start-up financing?

2025/08/13 by Eriko Naiki, Yuta Ogane
Business, Management and Accounting · #Entrepreneurship Studies and Influences #Private Equity and Venture Capital #Family Business Performance and Succession

paper · pdf · doi:10.1080/00036846.2025.2534734

Abstract

This paper examines how support from entrepreneurs’ insiders affects financial constraints for entrepreneurs using a survey of 2,644 new firms in Japan. The major findings of this paper are as follows. First, bank referrals from their insiders alleviate entrepreneurs’ financial constraints, whereas there is no evidence that the provision of initial funds from such insiders alleviates the constraints. Second, the effect of such referrals can be more pronounced for financially constrained entrepreneurs. Third, the referrals are effective in alleviating entrepreneurs’ financial constraints even if they do not receive initial funds from their insiders.

Citations

• Interorganizational Endorsements and the Performance of Entrepreneurial Ventures
• Sample Selection Bias as a Specification Error
• The central role of the propensity score in observational studies for causal effects
• Instrumental Variables Regression with Weak Instruments
• Constructing a Control Group Using Multivariate Matched Sampling Methods That Incorporate the Propensity Score
• Venture capital financing and the growth of high-tech start-ups: Disentangling treatment from selection effects
• The Benefits of Lending Relationships: Evidence from Small Business Data
• Relationship Lending and Lines of Credit in Small Firm Finance

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