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This chapter presents research to assess the impact of the recent financial crisis on technology-based small firms (TBSFs) in the United Kingdom based on findings from an extended telephone survey with the owner-managers of 49 young and 51 more mature TBSFs, undertaken in 2010. Even before the onset of the global financial crisis in 2007, it was generally acknowledged that TBSFs faced greater obstacles in accessing finance than conventional SMEs. This is because banks have difficulty assessing the viability of new technology-based business ventures due to information asymmetries, whilst risk capital providers may have difficulty providing appropriate or sufficient funds on terms acceptable to entrepreneurs. Given the recent difficulties that SMEs, in general, have faced in obtaining external finance, we would expect TBSFs to have been particularly adversely affected by the financial crisis. Our evidence showed that TBSFs exhibited a strong demand for external finance between 2007 and 2010, related to their growth ambitions and achievements. They sought finance mainly from banks but also with younger TBSFs seeking business angel finance and more mature TBSFs seeking venture capital finance. However, our evidence indicates that both debt and equity finance became harder to access for TBSFs, particularly for early-stage and more R&D-intensive firms. Where funding was offered, it was often on unacceptable terms with regards to the levels of collateral or equity required. The chapter provides evidence of a growing funding gap and concludes that the ability of TBSFs to contribute to economic recovery is hampered by ongoing problems in obtaining external finance.

The growing uses of digital technologies have been creating several new business opportunities. Recently, a new concept has emerged in the literature, the “digital entrepreneurship ecosystem” (DEE). However, it has been empirically understudied. Thus, this study aims to analyze the influence of DEE on entrepreneurial activity. The meta-organization theory was used as a perspective of analysis. A quantitative methodology was applied in a sample that includes data from 28 European countries through the generalized method of moments. It was concluded that the DEE pillars, informal and formal institutions, market conditions, physical infrastructure, human capital and talent and networking and support positively influence entrepreneurial activity. It was also found that the variables knowledge, creation and dissemination and finance have a negative impact on entrepreneurial activity. Several theoretical and empirical contributions are also left for the various stakeholders. The present study is original, as no known studies analyze the influence of DEE on entrepreneurial activity in European countries from the perspective of meta-organization theory.

Take the image of the entrepreneur as a driven accepter of risk, an individual (or set of individuals) hungry to amass a fortune as quickly as possible. This image is consistent with the traditional finance theory view of entrepreneurial startups, one that assumes that profit maximization is the firm’s sole motivation (Chaganti, DeCarolis & Deeds, 1995). Myers’s (1994) cost explanation of the pecking order hypothesis (i.e. entrepreneurs prefer internally generated funds first, debt next, and external equity last) incorporates this economically rational view of entrepreneurs’ financing preferences. According to this view, information asymmetry and uncertainty make the availability of external financing very limited and the cost of it prohibitively high. To compensate, entrepreneurs must give up greater and greater control in order to “buy” funds needed to achieve the desired growth and profitability. Indeed, Brophy and Shulman (1992, p. 65) state, “Those entrepreneurs willing to relinquish absolute independence in order to maximize expected shareholder wealth through corporate growth are deemed rational investors in the finance literature.” Undoubtedly, cost and availability explanations of financing choices are valid for many new and small businesses. However, many entrepreneurship researchers have long been dissatisfied with the incompleteness of this perspective.

A key element in the development of a technology, a company or an industry is the availability of finance. While much effort has been directed at understanding the roles of venture capital, angel investment and public investment, there does not appear to be much analysis of the industry-level effects as a new industry is emerging. In this chapter, we investigate the patterns of public and private investments and the role of government in support of financing the emergence of science and technology industries. We also examine the criteria used by venture capitalists in their assessment of investment opportunities regarding new technology-based ventures. We focus on the analysis of investment at stage between prototyping and commercialisation of a new technology. This stage has been labelled as the ‘valley of death’ from an investor perspective, which reflects greater risks for investors due to the high level of both technology and market uncertainty.

The chapter examines the role of volunteer business mentoring in potentially improving financing and financial management in under-served (i.e. schemes aim to assist deprived neighbourhoods and youth entrepreneurs) youth enterprises.

Youth entrepreneurship (commonly defined as entrepreneurs aged up to 35 years) is regarded by the OECD as under-represented, within entrepreneurship as a general social phenomenon, and young entrepreneurs as disadvantaged through being under-served. Indeed, young people with latent potential for entrepreneurship have been defined as a component of ‘Missing Entrepreneurs’ (OECD, 2013). This under-representation of nascent entrepreneurs within young people under 35 is partly theoretical. While examining entrepreneurship as a social phenomenon and taking a resource-based approach (Barney, 1991), young people are perceived at a particular disadvantage compared with older members of society. That is, however creative, they lack the experience and network resources of older members.

Theoretically, from a demand-side perspective, young people may have aspirations and the required skills for start-up entrepreneurship, but are disadvantaged from a supply-side perspective since financial institutions, such as the commercial banks, private equity investors and other suppliers of financial debt and equity, will see greater risk combined with a lack of track record and credibility (pertaining to information asymmetries and associated agency and signalling problems: Carpenter & Petersen, 2002; Hsu, 2004; Hughes, 2009; Mueller, Westhead, & Wright, 2014). This means that aspiring nascent youth entrepreneurs face greater challenges in obtaining mainstream and alternative sources of finance. Practically, unless such young entrepreneurs can call upon deep pockets of the ‘bank of Mum and Dad’ or family and friends, we can expect them to resort to pragmatic methods of stretching their resources, such as financial bootstrapping and bricolage (Mac an Bhaird, 2010; Mac an Bhaird & Lucey, 2015). Although these theoretical and practical issues have long existed for youth entrepreneurship, they have only been exacerbated in the post-2007 Global financial Crisis (GFC) financial and economic environment, despite the growth of alternative sources such as equity and debt sources of crowdfunding.

There has been an evidence for some time that young people have a higher desire to enter entrepreneurship and self-employment as a career choice, in preference to other forms of employment (Greene, 2005). Younger people are also more positive about entrepreneurial opportunities. For example, a Youth Business International, Global Entrepreneurship Monitor (YBI/GEM) (2013) report indicated that in the European Union (EU), ‘younger youth’ were more positive in their attitudes to good business opportunities and in seeing good opportunities than older people. Theoretically, the issues of low experience and credibility can be mitigated by the role of advisors, consultants and/or volunteer business mentors. In corporations and large organisations, mentors are known to be valuable for early career staff (Clutterbuck, 2004; Haddock-Millar, 2017). By extension with young entrepreneurs, business mentors raise credibility, develop personal and professional competence, business potential and entrepreneurial learning. From a supply-side perspective, this reduces risk for financial institutions, potentially increasing the likelihood of receiving external finance and improving the likely returns and business outcomes of such financing.

In examining the role of business mentoring in youth entrepreneurship finance, the chapter poses three research-related questions (RQs):

To what extent is the youth voluntary business mentoring (VBM) associated with access to external finance?

Where access to external finance takes place, does the VBM improve the outcomes of the businesses?

To what extent do VBMs make a difference to the performance of businesses receiving financial assistance?

The chapter draws on primary evidence from an online Qualtrics survey of 491 (largely) youth entrepreneur mentees drawn from eight countries in the YBI network. These were selected for their contrasting high (Sweden and Spain), middle (India, Argentina, Chile, Russia and Poland) and lower (Uganda) income economies, global coverage of four continents and operation of established entrepreneurship mentoring schemes. The study provides collective quantitative data on the current relationship between mentoring and the access and impact of external finance. It surveyed current or recently completed mentees during Autumn 2016 – the typical mentoring cycle being 12 months. Additionally, the chapter draws on further qualitative insight evidence from face-to-face interviews, with current mentor-mentee case study pairings from the eight countries.

In summary, the profile of surveyed mentees demonstrated even gender distribution, with three-fifths currently in mentoring relationships. At the time of commencing mentoring, nearly four-fifths were aged under 35, half being self-employed, one quarter employed, with the remainder equally distributed between education and unemployment. At commencement of mentoring, mentee businesses were typically in early stages, either pre-start (37%) or just started trading (34%), the main sectors represented being business services (16%), education and training (16%), retail and wholesale (12%) and creative industries (8%), with the median level of own business management —one to two years.

For one-third of mentees, mentoring was compulsory, due largely to receiving enterprise finance support, whilst for the remainder, more than a quarter stated that access to business finance assistance was either considerably or most important in their choice to go on the programme.

In terms of business performance, businesses receiving external finance (loans or grants through the programme) or mentoring for business finance performed significantly better than the rest of the sample: amongst those trading 47% increased sales turnover, compared to 32% unassisted (<0.05 level); 70% increased employment, compared to 42% (<0.05); 58% directly attributed improved performance to mentoring, compared to 46% (<0.1).

The chapter provides both statistical and qualitative evidences supporting the premise that youth business mentoring can both improve access to external finance and lead to improved business performance. This provides useful guidance to youth business support, given that in some of the countries studied, external financing in the form of grants and soft micro loans for youth entrepreneurs are not available.

In the international arena, there is an ongoing debate over the lack of newly started businesses in general and over how to obtain sustainable growth in these businesses in particular. Policy-makers in Europe have sought to ease this problem of paucity of new firm's start-ups, which is mainly caused by a lack of financial resources for new innovative ideas as problematic (European Commission (2007–2013); Groen, Jenniskens, & van der Sijde, 2005). Consequently, during the latest decade, there has been an increase in the number of public sector financial schemes designed to promote entrepreneurship in very early-stage businesses (COM, 2005, 2006). These efforts have, however, escaped criticism. Those who promote public financing believe that with the right tools and governance this type of support is an important complement to the private sector financial market (Oakey, 2003). However, bankers and venture capitalists often state that the main issue is not the lack of available capital but the inability of entrepreneurs to convince investors of the merits of their business ideas (Mason & Harrison, 2002). There have also been arguments against the socioeconomic efficiency (Storey, 1994).

The efficacy of conventional financing strategies such as angel investment and venture capital financing developed in the context of Western economies but applied to Africa remains a subject of interest. This chapter, therefore, examined financing strategies that are indigenously peculiar to Africa and opportunities therein that could lead to entrepreneurial growth. Consequently, based on a number of criteria such as population and gross domestic product, five countries were selected from the five distinct African geographical regions while six different homogenous ethnic groups were selected from the five countries based on numbers (strength) and spread. A study of the financing strategies of these ethnic groups revealed germane customary funding practices based on culture and communal norms. Thus, as a result of the findings, a model was developed to explain the path to rapid entrepreneurship growth. It is emphasised that there are indigenous modes of financing strategies which the world could learn and adopt from Africa, particularly in instances where conventional theories or modes are not quite effective. Africa needs to achieve industrialisation and grow at a very rapid pace, and this could be achieved through indigenous financing strategies for its many unemployed youths. Advice for managers, educators and government officials are discussed.

The identification, access, and acquisition of financial resources are critical to the growth of any entrepreneurial venture. To perform better, growth-oriented women entrepreneurs need financial resources. Unfortunately, obtaining financial resources is a greater obstacle for women entrepreneurs than for men entrepreneurs. This chapter considers three different options for growth financing: crowdfunding, angel financing, and venture capital. Suggested strategies for women entrepreneurs seeking to raise money are also offered.