Entrepreneurs' searching for capital through their network ties

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A master thesis presentation on entrepreneurship in high tech industry and social networks in relation to the acquisition of funds. The research took place in the Greek semiconductor industry in 2008.

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Entrepreneurs' searching for capital through their network ties

  1. 1. MscBA Entrepreneurship and New Business Venturing Master Thesis Entrepreneurs’ searching for capital through their network ties: An empirical study in the Greek semiconductor industry Nikolaos Nakos Coach: Dr. Willem Hulsink Co-Reader: Dr. Vareska Van de Vrande Rotterdam 2008
  2. 2. MscBA Entrepreneurship and New Business Venturing Entrepreneurs’ searching for capital through their network ties: An empirical study in the Greek semiconductor industry Startup entrepreneur: the person who sets up a new company
  3. 3. MscBA Entrepreneurship and New Business Venturing seed capital : financial resources that entrepreneurs need at the initial stages of their firm to conduct a market research,buy equipments and facilities and pay the operational costs Entrepreneurs’ searching for capital through their network ties: An empirical study in the Greek semiconductor industry
  4. 4. MscBA Entrepreneurship and New Business Venturing Entrepreneurs’ searching for capital through their network ties: An empirical study in the Greek semiconductor industry Network ties: Strong ties (Family,Friends,close (ex)colleagues ) Weak ties (business contacts, acquaintances)
  5. 5. MscBA Entrepreneurship and New Business Venturing Entrepreneurs’ searching for capital through their network ties: An empirical study in the Greek semiconductor industry The empirical setting: high-tech Greek firms which design microprocessors for several applications
  6. 6. Purpose & value of the study the use of social networks influence the new venture creation process the use of social networks can lead entrepreneurs to resources Financial resources are fundamental for the startup of a firm Relarionship between social networks and financial resources This relationship is understudied The first research ever made in the Greek Semiconductor industry
  7. 7. Purpose & value of the study the use of social networks influence the new venture creation process the use of social networks can lead entrepreneurs to resources Financial resourcesMain research for the startup of a firm are fundamental question: How startup entrepreneurs of the high-tech sector use their network ties to get access to sources of capital? Relarionship between social networks and financial resources This relationship is understudied The first research ever made in the Greek Semiconductor industry
  8. 8. Theoretical Concepts Entrepreneurship Human Capital Social Capital The strength of ties Sources of Funding
  9. 9. The Greek Semiconductor Industry 35 firms & 15 research institutes organizations: Hellenic Semiconductor association & Corallia (Clustering initiative) 700 employees 60 mil. € turnover 30 mil. € investments Future projections: 150 companies & > 300 mil. € turnover in 2012
  10. 10. Methodology Research Design Qualitative method Comparative case study (Within & cross case analysis) Semi-structured interview Measuring networks ties (Granovetter, 1973) Frequency of contact Emotional intensity of the relationship Degree of intimacy Reciprocal commitments within the relationship
  11. 11. The Case Studies 7 Case Studies Founding year from 2000 to 2007 Located in the two main technological centers of Greece: Attica & Patras Specialized in designing services & consulting Founder’s Background: Master & PHD studies in electronic engineering, no prior entrepreneurial experience, some of them prior working experience
  12. 12. Analysis Type of Ties Companies Strong Ties Weak Ties Bootstrapping: ALMA Technologies - Family’s funds - - Co-founders’ funds The firms were founded by teams of Bootstrapping: Diaplous Ltd. - engineers Co-founders’ funds Bootstrapping: Elxys Innovations - Co-founders’ funds Additional members in the founders’ team brought financial resources Bootstrapping: European and State InAccess Networks Co-founders’ funds subsidies Bootstrapping: Bootstrapping methods appeared Think Silicon - Co-founders’ funds in all cases Private equity Bootstrapping: company Analogies S.A. Co-founders’ funds & European and State Weak ties were used only in the subsidies private - financed firms Bootstrapping: Venture Capital Helic Family’s funds Company
  13. 13. Findings The use of strong ties lead to the acquisition of capital through bootstrapping Weak ties found to be significant for the acquisition of external financing (equity finance) Entrepreneurs who did not raise funds from investors did not make use of weak ties Weak ties are more important than strong ties for the acquisition of external financing at the startup stage
  14. 14. Limitations & Further Research Limitations Single static point of time Identification criteria of ties Time & resource restrictions No previous research in the specific context Further Research Conduct the research in other emerging economies like Balkans and Eastern Europe Measure the influence of human capital Implications for nascent entrepreneurs
  15. 15. human capital entrepreneurship weak ties strong ties high - tech Keep your contacts warm! networks bootstrapping startups venture capital social capital Greece
  16. 16. Ευχαριστώ για την προσοχή σας!

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