8 Formal debt as a source of entrepreneurial finance
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Abstract
Financing forms can be classified into two categories: formal financing and informal financing. Formal finance obtains funds from formal financial intermediaries such as banks or private lenders. Formal debt is defined as a loan that is sourced from banks and other formal financial intermediaries (Elston et al., 2016; Coleman et al., 2016). The fundamental difference between formal and informal debt lies with creditors. Formal debt is generally assumed to be borrowed from official formal financial sources. In reality of debt business,formal debt is an essential part of developing debt financing for startups or venture enterprises. Therefore, it is imperative for startups or venture enterprises to understand and choose the formal debt mode correctly. However, formal debt is a double-edged sword, which meets the capital needs of a startup and brings financial benefits, and brings risks to startup, which may lead to financial crisis and make the startups face the risk of bankruptcy.
Abstract
Financing forms can be classified into two categories: formal financing and informal financing. Formal finance obtains funds from formal financial intermediaries such as banks or private lenders. Formal debt is defined as a loan that is sourced from banks and other formal financial intermediaries (Elston et al., 2016; Coleman et al., 2016). The fundamental difference between formal and informal debt lies with creditors. Formal debt is generally assumed to be borrowed from official formal financial sources. In reality of debt business,formal debt is an essential part of developing debt financing for startups or venture enterprises. Therefore, it is imperative for startups or venture enterprises to understand and choose the formal debt mode correctly. However, formal debt is a double-edged sword, which meets the capital needs of a startup and brings financial benefits, and brings risks to startup, which may lead to financial crisis and make the startups face the risk of bankruptcy.
Kapitel in diesem Buch
- Frontmatter I
- Acknowledgments V
- Contents VII
- Editor and contributor biographies XI
- Introduction 1
-
Part I: The individual level
- Introduction 13
- 1 The role of founders’ tangible resources in founding new ventures 15
- The bootstrapping-bricolage interface 37
- 3 Effectuation and entrepreneurial finance 55
- 4 Portfolio entrepreneurs: The role of risk 75
-
Part II: The inner circle
- Introduction 89
- 5 Informal financing of entrepreneurs 91
- 6 Funding entrepreneurs within business groups: An emerging market view 107
- 7 How business incubators and accelerators finance startups 119
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Part III: The wider world
- Introduction 137
- 8 Formal debt as a source of entrepreneurial finance 139
- 9 Microfinance and entrepreneurial finance: A review and future research agenda 153
- 10 Venture capital as a source of entrepreneurial finance 171
- 11 Corporate venture capital: A literature review and research agenda 195
- 12 The role of business angels in the new financial landscape 223
- 13 Government financing of startups 245
- 14 Family offices as startup investors: A synergetic relationship of the old and new economy? 265
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Part IV: Emerging perspectives
- Introduction 291
- 15 A scoping review of most influential entrepreneurial finance studies in developing countries 293
- 16 Conceptualizing gender in entrepreneurial finance: Past trends, current developments and future opportunities 317
- 17 Indigenous entrepreneurial finance: Mapping the landscape with Canadian evidence 335
- 18 Financing entrepreneurs in post-conflict and disaster zones 359
- 19 Ethics and entrepreneurial finance 375
- Conclusion 391
- List of figures 401
- List of tables 403
- Index 405
Kapitel in diesem Buch
- Frontmatter I
- Acknowledgments V
- Contents VII
- Editor and contributor biographies XI
- Introduction 1
-
Part I: The individual level
- Introduction 13
- 1 The role of founders’ tangible resources in founding new ventures 15
- The bootstrapping-bricolage interface 37
- 3 Effectuation and entrepreneurial finance 55
- 4 Portfolio entrepreneurs: The role of risk 75
-
Part II: The inner circle
- Introduction 89
- 5 Informal financing of entrepreneurs 91
- 6 Funding entrepreneurs within business groups: An emerging market view 107
- 7 How business incubators and accelerators finance startups 119
-
Part III: The wider world
- Introduction 137
- 8 Formal debt as a source of entrepreneurial finance 139
- 9 Microfinance and entrepreneurial finance: A review and future research agenda 153
- 10 Venture capital as a source of entrepreneurial finance 171
- 11 Corporate venture capital: A literature review and research agenda 195
- 12 The role of business angels in the new financial landscape 223
- 13 Government financing of startups 245
- 14 Family offices as startup investors: A synergetic relationship of the old and new economy? 265
-
Part IV: Emerging perspectives
- Introduction 291
- 15 A scoping review of most influential entrepreneurial finance studies in developing countries 293
- 16 Conceptualizing gender in entrepreneurial finance: Past trends, current developments and future opportunities 317
- 17 Indigenous entrepreneurial finance: Mapping the landscape with Canadian evidence 335
- 18 Financing entrepreneurs in post-conflict and disaster zones 359
- 19 Ethics and entrepreneurial finance 375
- Conclusion 391
- List of figures 401
- List of tables 403
- Index 405
