Innovation and Financial Markets

5Funding Innovation

A study of 1,053 firms to determine whether there are factors that can influence both the survival and strong growth of start-ups concluded, after extensive analysis, that only three factors really promote the chances of survival and strong growth of start-ups (Cooper et al. 1994):

• – education level;
• – knowledge of the sector of activity in which the entrepreneur embarks;
• – initial funding levels.

These results were more recently corroborated by another study of more than 7,000 firms (Dahlqvist et al. 2000).

The first two points are self-explanatory and do not necessarily require “technical knowledge” for the founder to act on. On the other hand, initial funding solutions for start-ups have recently become more complex, hence the decision to devote a chapter to this key success factor.

Indeed, Block et al. (2017) mention many new types of funding for entrepreneurs that have become (more) available in recent years.

The purpose of this chapter is therefore to recall the issues related to funding innovation before presenting the main funding solutions available to the start-up.

5.1. Issues related to funding growth

For several years now, not a week has gone by without major economic newspapers reporting on a start-up’s record fundraising or on the historic amounts raised by venture capital funds.

Fund(ing) and innovation have therefore been intimately linked for several years in the minds of the general public. This link has become so strong that we can ...