A lthough entrepreneurial activity is an important part of a capitalist economy, data about U.S. ... more A lthough entrepreneurial activity is an important part of a capitalist economy, data about U.S. businesses in their early years of operation have been extremely limited. 1 As part of an effort to gather more data on new businesses in the United States, the Ewing Marion Kauffman Foundation (the Foundation) sponsored the Kauffman Firm Survey (KFS), a panel study of new businesses founded in 2004 and tracked over their early years of operation. The KFS dataset provides researchers with a unique opportunity to study a panel of new businesses from startup to sustainability, with longitudinal data centering on topics such as how businesses are financed; the products, services, and innovations these businesses possess and develop in their early years of existence; and the characteristics of those who own and operate them. 2
This paper investigates the capital structure choices that firms make in their initial year of op... more This paper investigates the capital structure choices that firms make in their initial year of operation, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less extensively on friends and family-based funding sources. This fact is robust to
(LEEM) at CES to investigate gross and net job flows for the U. S. economy. Much of the previous ... more (LEEM) at CES to investigate gross and net job flows for the U. S. economy. Much of the previous work on U.S. job flows has been based on analysis of the Longitudinal Research Database (LRD), which is limited to establishments in the manufacturing sector.
This paper investigates the capital structure choices that firms make in their initial year of op... more This paper investigates the capital structure choices that firms make in their initial year of operations, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less heavily on friends and family-based funding sources. This striking fact holds even when we purge each firm's credit score of variation due to demand-side credit characteristics. The heavy reliance on external debt underscores the importance of well functioning credit markets for the success of nascent business activity.
Although a large percentage of all firms inject capital in the first few years of existence, we k... more Although a large percentage of all firms inject capital in the first few years of existence, we know relatively little about the determinants of early capital use because of the lack of longitudinal data on business ventures. New panel data from the Kauffman Firm Survey are used to examine the incidence and determinants of financial capital use among young firms. We find a heavy reliance on owner's equity at startup that declines substantially in subsequent years, whereas the reliance on outsider debt remains as high in subsequent years as at the point of startup. In regression analyses, we find important similarities and differences in the determinants between startup capital and subsequent capital injections. The education level of the owner, for example, is less strongly associated with subsequent capital injections than with startup capital. On the other hand, credit ratings are more important for the ability of young firms to raise capital in the early stages of growth than at startup. We also find that financial injections after startup reveal are positively associated with startup capital and initial sales levels. Focusing on racial differences, we find that black-owned businesses face persistent difficulty in accessing external capital markets. Black-owned businesses rely much more on owner equity than do white-owned businesses indicating that black-owned businesses face more difficulty in raising external capital. Direct evidence on average levels of external capital reveals large racial disparities. New findings from the KFS on capital use among young firms indicate that black firms have substantially lower financial injections in the two years following startup than white firms and continue to rely more heavily on owner equity to finance their operations. Regression analyses indicate that racial disparities in the amounts and types of early financing do not entirely disappear after controlling for differences in credit quality, human capital, and firm characteristics. Special decomposition estimates identify several factors contributing to why black businesses have lower capital injections on average. The most important factor contributing to white/black differences in financing levels are credit scores, especially for financial injections in the years following startup. Lower levels of startup capital and initial sales are also found to be associated with lower black levels of capital use in the years after startup.
In this short report, data was used from the Kauffman Firm survey to examine the financing source... more In this short report, data was used from the Kauffman Firm survey to examine the financing sources and strategies, by gender, of high-tech firms. The findings reveal that women entrepreneurs raised significantly smaller amounts of financial capital at startup than men did. When controlled for a variety of firm and owner characteristics, however, there were no significant differences between women and men in terms of total capital raised at startup. Nevertheless, even controlling for other variables, women high-tech entrepreneurs were significantly less likely to use external equity.
... plays an important role in the growth and survival of a business (Lucas 1978, Jovanovic 1982,... more ... plays an important role in the growth and survival of a business (Lucas 1978, Jovanovic 1982,Robb 2000). The success of a business will depend on the owner's ability to obtain the necessary financial capital, which may be obtained from banks, venture capitalists, or other ...
While new firm creation is an important feature of modern economies, research on major aspects of... more While new firm creation is an important feature of modern economies, research on major aspects of the early stages of the business life course is hampered by the length and complexity of the process. Conceptual complexity is reflected in the difficulty of developing simple, precise measures of initiating the firm gestation process, or conception, as well as the transition from
In the aftermath of the financial crisis of 2008, policy-makers at all levels are concerned about... more In the aftermath of the financial crisis of 2008, policy-makers at all levels are concerned about the impact of the crisis on access to financial resources by young firms, particularly as major changes occur in bank-lending practices and uncertainties surround the implementation of financial reform legislation. In this paper, we analyze the types and sources of financing used in young firms during the years 2007 and 2008. We find differential outcomes for firms who applied for loans and received them, those who applied and were denied, and those which did not apply for fear of denial. We explore the factors that mitigate the decision to apply for a loan and the subsequent outcomes of firm survival and growth. Our work provides insights into the relative importance of supply and demand for financing both prior to and subsequent to the financial shocks. We leverage various measures and perceptions to disentangle the decision to seek bank loans from the likelihood of receiving a loan based on credit scores and other objective measures. We find that both tangible and intangible assets, particularly intellectual property, play a significant role in receipt of bank loans in the firms' early years of operation.
This article uses data from the Kauffman Firm Survey to explore, by gender, the relationship of s... more This article uses data from the Kauffman Firm Survey to explore, by gender, the relationship of start up capital for new firm performance in terms of assets, revenues, income, employment, and survival. Our results reveal that, consistent with prior research, women-owned firms start with smaller amounts of capital than men-owned firms. Our findings also indicate that new firms with higher amounts of capital at start-up have higher levels of performance. Finally, our results reveal that, even controlling for the amount of capital at start-up, women-owned firms still underperformed firms owned by men. This finding suggests that other factors besides financial capital are at work in determining the performance outcomes of women-owned firms.
This paper investigates the capital structure choices that firms make in their initial year of op... more This paper investigates the capital structure choices that firms make in their initial year of operations, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less heavily on friends and family-based funding sources. This striking fact holds even when we instrument for credit supply by purging each firm's Dun and Bradstreet credit score of variation that owes to demand-side credit characteristics. The heavy reliance on external debt underscores the importance of well functioning credit markets for the success of nascent business activity.
A lthough entrepreneurial activity is an important part of a capitalist economy, data about U.S. ... more A lthough entrepreneurial activity is an important part of a capitalist economy, data about U.S. businesses in their early years of operation have been extremely limited. 1 As part of an effort to gather more data on new businesses in the United States, the Ewing Marion Kauffman Foundation (the Foundation) sponsored the Kauffman Firm Survey (KFS), a panel study of new businesses founded in 2004 and tracked over their early years of operation. The KFS dataset provides researchers with a unique opportunity to study a panel of new businesses from startup to sustainability, with longitudinal data centering on topics such as how businesses are financed; the products, services, and innovations these businesses possess and develop in their early years of existence; and the characteristics of those who own and operate them. 2
This paper investigates the capital structure choices that firms make in their initial year of op... more This paper investigates the capital structure choices that firms make in their initial year of operation, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less extensively on friends and family-based funding sources. This fact is robust to
(LEEM) at CES to investigate gross and net job flows for the U. S. economy. Much of the previous ... more (LEEM) at CES to investigate gross and net job flows for the U. S. economy. Much of the previous work on U.S. job flows has been based on analysis of the Longitudinal Research Database (LRD), which is limited to establishments in the manufacturing sector.
This paper investigates the capital structure choices that firms make in their initial year of op... more This paper investigates the capital structure choices that firms make in their initial year of operations, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less heavily on friends and family-based funding sources. This striking fact holds even when we purge each firm's credit score of variation due to demand-side credit characteristics. The heavy reliance on external debt underscores the importance of well functioning credit markets for the success of nascent business activity.
Although a large percentage of all firms inject capital in the first few years of existence, we k... more Although a large percentage of all firms inject capital in the first few years of existence, we know relatively little about the determinants of early capital use because of the lack of longitudinal data on business ventures. New panel data from the Kauffman Firm Survey are used to examine the incidence and determinants of financial capital use among young firms. We find a heavy reliance on owner's equity at startup that declines substantially in subsequent years, whereas the reliance on outsider debt remains as high in subsequent years as at the point of startup. In regression analyses, we find important similarities and differences in the determinants between startup capital and subsequent capital injections. The education level of the owner, for example, is less strongly associated with subsequent capital injections than with startup capital. On the other hand, credit ratings are more important for the ability of young firms to raise capital in the early stages of growth than at startup. We also find that financial injections after startup reveal are positively associated with startup capital and initial sales levels. Focusing on racial differences, we find that black-owned businesses face persistent difficulty in accessing external capital markets. Black-owned businesses rely much more on owner equity than do white-owned businesses indicating that black-owned businesses face more difficulty in raising external capital. Direct evidence on average levels of external capital reveals large racial disparities. New findings from the KFS on capital use among young firms indicate that black firms have substantially lower financial injections in the two years following startup than white firms and continue to rely more heavily on owner equity to finance their operations. Regression analyses indicate that racial disparities in the amounts and types of early financing do not entirely disappear after controlling for differences in credit quality, human capital, and firm characteristics. Special decomposition estimates identify several factors contributing to why black businesses have lower capital injections on average. The most important factor contributing to white/black differences in financing levels are credit scores, especially for financial injections in the years following startup. Lower levels of startup capital and initial sales are also found to be associated with lower black levels of capital use in the years after startup.
In this short report, data was used from the Kauffman Firm survey to examine the financing source... more In this short report, data was used from the Kauffman Firm survey to examine the financing sources and strategies, by gender, of high-tech firms. The findings reveal that women entrepreneurs raised significantly smaller amounts of financial capital at startup than men did. When controlled for a variety of firm and owner characteristics, however, there were no significant differences between women and men in terms of total capital raised at startup. Nevertheless, even controlling for other variables, women high-tech entrepreneurs were significantly less likely to use external equity.
... plays an important role in the growth and survival of a business (Lucas 1978, Jovanovic 1982,... more ... plays an important role in the growth and survival of a business (Lucas 1978, Jovanovic 1982,Robb 2000). The success of a business will depend on the owner's ability to obtain the necessary financial capital, which may be obtained from banks, venture capitalists, or other ...
While new firm creation is an important feature of modern economies, research on major aspects of... more While new firm creation is an important feature of modern economies, research on major aspects of the early stages of the business life course is hampered by the length and complexity of the process. Conceptual complexity is reflected in the difficulty of developing simple, precise measures of initiating the firm gestation process, or conception, as well as the transition from
In the aftermath of the financial crisis of 2008, policy-makers at all levels are concerned about... more In the aftermath of the financial crisis of 2008, policy-makers at all levels are concerned about the impact of the crisis on access to financial resources by young firms, particularly as major changes occur in bank-lending practices and uncertainties surround the implementation of financial reform legislation. In this paper, we analyze the types and sources of financing used in young firms during the years 2007 and 2008. We find differential outcomes for firms who applied for loans and received them, those who applied and were denied, and those which did not apply for fear of denial. We explore the factors that mitigate the decision to apply for a loan and the subsequent outcomes of firm survival and growth. Our work provides insights into the relative importance of supply and demand for financing both prior to and subsequent to the financial shocks. We leverage various measures and perceptions to disentangle the decision to seek bank loans from the likelihood of receiving a loan based on credit scores and other objective measures. We find that both tangible and intangible assets, particularly intellectual property, play a significant role in receipt of bank loans in the firms' early years of operation.
This article uses data from the Kauffman Firm Survey to explore, by gender, the relationship of s... more This article uses data from the Kauffman Firm Survey to explore, by gender, the relationship of start up capital for new firm performance in terms of assets, revenues, income, employment, and survival. Our results reveal that, consistent with prior research, women-owned firms start with smaller amounts of capital than men-owned firms. Our findings also indicate that new firms with higher amounts of capital at start-up have higher levels of performance. Finally, our results reveal that, even controlling for the amount of capital at start-up, women-owned firms still underperformed firms owned by men. This finding suggests that other factors besides financial capital are at work in determining the performance outcomes of women-owned firms.
This paper investigates the capital structure choices that firms make in their initial year of op... more This paper investigates the capital structure choices that firms make in their initial year of operations, using restricted-access data from the Kauffman Firm Survey. Contrary to many accounts of startup activity, the firms in our data rely heavily on external debt sources such as bank financing, and less heavily on friends and family-based funding sources. This striking fact holds even when we instrument for credit supply by purging each firm's Dun and Bradstreet credit score of variation that owes to demand-side credit characteristics. The heavy reliance on external debt underscores the importance of well functioning credit markets for the success of nascent business activity.
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Papers by Alicia Robb