The impact of proximity to social networks towards financiers on start-up fundraising in Germany
(2021) ENTN19 20211Department of Business Administration
- Abstract (Swedish)
- Within the start-up ecosystem, young and small firms often face a significant challenge by acquiring external capital, the so-called funding gap. A trend throughout the recent years was, (and still is), the geographical clustering of financial institutions and investors in financial concentrated areas, which are referred to as financial centers. Those areas create huge disparities between different locations and amplify the uneven distribution of capital within countries and regions. Prior research found that modern technologies, social networking and other mechanisms are thereby influencing the general understanding of start-up localisation and fundraising, which created a need for further research into the intersection of start-up... (More)
- Within the start-up ecosystem, young and small firms often face a significant challenge by acquiring external capital, the so-called funding gap. A trend throughout the recent years was, (and still is), the geographical clustering of financial institutions and investors in financial concentrated areas, which are referred to as financial centers. Those areas create huge disparities between different locations and amplify the uneven distribution of capital within countries and regions. Prior research found that modern technologies, social networking and other mechanisms are thereby influencing the general understanding of start-up localisation and fundraising, which created a need for further research into the intersection of start-up fundraising and localisation.
This study aims to determine the impact that a start-up’s proximity to their social network towards financiers can have on their fundraising volumes. The growing landscape of start-ups within the German technology sector was thereby found to be the area of investigation.
In order to measure a potential impact of such a proximity, a survey was distributed within the German start-up ecosystem. Respondents were anonymously asked to determine their location, fundraising volumes and network connections. After separating the respondents into financial centers and non-financial centers, various tests, such as independent sample t-tests, Mann-Whitney U-tests, Pearson- and Spearman bivariate correlation tests were conducted.
The key findings in this research were: a proximity to a financial center does have an impact on the fundraising volume, but a proximity to network connections does not have an impact on the fundraising volume, per sé. Within this research it was found that start-ups from financial centers on average raise 17.13% more capital in fundraising rounds, compared to start-ups based in non-financial centers. Furthermore, the data showed an existing, but small, effect of localisation on networking and a strong positively correlated relationship between the network size and total fundraising volume. Finally, the limitations of this research were mainly based on the sample size (59), which was extensive enough to conduct various statistical analyses, yet a bigger amount of data would potentially have created more in-depth knowledge about the impact of a proximity to social networks towards financiers on the fundraising volume in Germany. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9052634
- author
- van Hooren, Didier Roman Hubertus Marie LU and Pospich, Dennis LU
- supervisor
- organization
- course
- ENTN19 20211
- year
- 2021
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- start-up, fundraising, network, localisation, business angel, venture capital, NTBF
- language
- English
- id
- 9052634
- date added to LUP
- 2021-07-30 15:49:23
- date last changed
- 2021-07-30 15:49:23
@misc{9052634,
abstract = {{Within the start-up ecosystem, young and small firms often face a significant challenge by acquiring external capital, the so-called funding gap. A trend throughout the recent years was, (and still is), the geographical clustering of financial institutions and investors in financial concentrated areas, which are referred to as financial centers. Those areas create huge disparities between different locations and amplify the uneven distribution of capital within countries and regions. Prior research found that modern technologies, social networking and other mechanisms are thereby influencing the general understanding of start-up localisation and fundraising, which created a need for further research into the intersection of start-up fundraising and localisation.
This study aims to determine the impact that a start-up’s proximity to their social network towards financiers can have on their fundraising volumes. The growing landscape of start-ups within the German technology sector was thereby found to be the area of investigation.
In order to measure a potential impact of such a proximity, a survey was distributed within the German start-up ecosystem. Respondents were anonymously asked to determine their location, fundraising volumes and network connections. After separating the respondents into financial centers and non-financial centers, various tests, such as independent sample t-tests, Mann-Whitney U-tests, Pearson- and Spearman bivariate correlation tests were conducted.
The key findings in this research were: a proximity to a financial center does have an impact on the fundraising volume, but a proximity to network connections does not have an impact on the fundraising volume, per sé. Within this research it was found that start-ups from financial centers on average raise 17.13% more capital in fundraising rounds, compared to start-ups based in non-financial centers. Furthermore, the data showed an existing, but small, effect of localisation on networking and a strong positively correlated relationship between the network size and total fundraising volume. Finally, the limitations of this research were mainly based on the sample size (59), which was extensive enough to conduct various statistical analyses, yet a bigger amount of data would potentially have created more in-depth knowledge about the impact of a proximity to social networks towards financiers on the fundraising volume in Germany.}},
author = {{van Hooren, Didier Roman Hubertus Marie and Pospich, Dennis}},
language = {{eng}},
note = {{Student Paper}},
title = {{The impact of proximity to social networks towards financiers on start-up fundraising in Germany}},
year = {{2021}},
}