Funding and Performance Pattern Matrix in the Startup Phase: A Study of Startup MSMEs in Indonesia

Abstract

Limited access to capital is a classic issue in and a burden to micro, small and medium enterprises (MSMEs) in Indonesia. The existence of the problem with information asymmetry and agency conflicts that are predominant at the level of small businesses, increasingly hampers the opportunity to obtain funds from various external sources. Especially for businesses that are at the pioneering stage, entrepreneurs are required to think creatively, have the courage to take risks, and be independent in fulfilling resources to realize business opportunities. The availability of funds certainly has an impact on business performance, either directly or indirectly. Based on a literature review, business performance is categorized into financial and non-financial dimensions with various measurement proxies. However, some of the models and measurements proposed are not always suitable in assessing the performance of MSMEs, especially in the startup phase. Therefore, this chapter concurrently describes the funding patterns and the funding alternatives to measure the performance of new businesses based on the existing literature. Theoretically, this research adds a perspective in the field of entrepreneurial finance regarding funding patterns that can be implemented by startup businesses in Indonesia and provides a proposal for measuring the concept of performance that is more adaptive and comprehensive for businesses in the startup stage. The implication of this research for entrepreneurs leads to the need to adjust funding decisions according to the changing stages of the business lifecycle and to expand the funding window to support the sustainability of small businesses.

Citation

Rita, M.R., Kristanto, A.B., Nugrahanti, Y.W. and Usmanij, P. (2022), "Funding and Performance Pattern Matrix in the Startup Phase: A Study of Startup MSMEs in Indonesia", Ratten, V., Jones, P., Braga, V. and Parra-López, E. (Ed.) Artisan Entrepreneurship, Emerald Publishing Limited, Leeds, pp. 127-160. https://doi.org/10.1108/978-1-80262-077-120221012