Gender and Alternative Start-Up Business Funding

Abstract

The broad context for our study is set by discussions of equality of opportunity to start-up business finance. There is an increasing literature which suggests that female entrepreneurs face significant disadvantages compared to their male counterparts in their access to resources from orthodox channels such as banks. The consequence of undercapitalization during the start-up phase is underperformance during the life of the business. Adopting a range of informal ‘bootstrapping’ techniques gives entrepreneurs the opportunity to obtain alternative financial resources without resorting to debt or equity funding. In this article, we draw on a unique sample of 211 nascent entrepreneurs in the early stages of business start-up, contacted through a postal and web-based two-wave longitudinal survey, to examine gender differences with regards to different forms of bootstrapping behaviour. The study demonstrates significant differences in the ways that male and female entrepreneurs access informal financial resources. We discuss explanations drawn from women's studies suggesting that the features of capital markets and business and personal characteristics that limit female business owners from accessing sources of orthodox finance also impede their access to the most effective forms of bootstrapping. We suggest that further explanatory and qualitative research is required to investigate these effects.