Organizational Emergence: The Impact of Entrepreneurs' Behaviors on External Financing

Research on entrepreneurs’ acquisition of external financing focuses on their attitudes toward risk, and investors’ perceptions of the venture. This study investigates the discrete behaviors undertaken by nascent entrepreneurs. Exploration of the shape of individual hazard functions determines when external financing is received, and relationships between external funding and predictor variables link characteristics of the venture to action. Based on nationally representative data from the PSED II, nascent entrepreneurs receive financing late in the process: 2 years, 5 months after initial conception of the business idea. Entrepreneurs with a higher net worth, starting ventures at dedicated locations outside the home, are more likely to acquire external financing earlier. This study sheds light on the heterogeneity of entrepreneurial acts, one of the micro- foundations of entrepreneurship.