A framework of factors and efforts determining fundraising by New Technology Based Firms

Abstract

Fundraising by New Technology Based Firms (NTBFs) is critical for them to be able to start their operations and get established in the market. The aim of this study was to investigate how entrepreneurs, on the basis of processes and management actions, have attracted external private investors. The methodological procedure consisted of analyzing fundraising processes in 16 NTBFs of Minas Gerais and São Paulo, using a multi-case study. Initially we designed a preliminary framework based on a literature review, using the methods of action research (PA), in-depth semi-structured interviews and documentary analysis to assess its validity. Among the observed factors that influence fundraising, the following ones stand out in terms of importance: the adoption of a just-do-it strategy by the entrepreneurs; their ability to develop and incorporate basic management skills; their ability to form partnerships and to carry out bootstrapping activities; the entrepreneurs’ complete dedication to the company; activities of strategic planning, culminating in the preparation of a business plan; previous fundraising from other sources; and the disclosure of “first cases”. On the basis of these results we also designed a framework that relates the factors influencing the process of raising private funds from external sources and the early stages of the firms’ development. This framework represents a temporal configuration with a new proposition of early stages of NTBFs and a comparison of the factors relevant to fundraising mentioned in the literature review and what was found in the field research.

Key words: New Technology Based Firms, fundraising, investors.