Financial Statement and Projection Preparation in Start-Up Ventures

2009 ◽  
Vol 84 (1) ◽  
pp. 27-51 ◽  
Author(s):  
Gavin Cassar
Keyword(s):  
Information Economics ◽  
Financial Statements ◽  
Financial Statement ◽  
High Tech ◽  
Economic Significance ◽  
Sales Forecasts ◽  
Start Up ◽  
Fundamental Uncertainty ◽  
Start Ups ◽  
Funding Level

ABSTRACT: Using a representative sample of entrepreneurs who are in the process of starting a business, this study investigates the determinants of the preparation of financial statements and projections in start-up ventures. Consistent with predictions from information economics and contracting, I find that the use of outside funding, level of competition, and venture scale are positively associated with the intended frequency of financial statement preparation. However, comparing the economic significance of alternative influences suggests that the benefit of reducing competitive and fundamental uncertainty is more influential in explaining variations in intentions to prepare financial statements. Further, I find the determinants of preparation frequency vary among different financial statements; for instance, cash statements are more important for start-ups with products in earlier stages of development and with greater competition. In contrast to financial statements, the preparation of projections such as formal financial projections and regular sales forecasts by start-ups is positively associated with the importance of intangible investments such as patents, research and development, and with start-ups in high-tech industries.

scholarly journals Creating Financial Statements For Start-Ups

2020 ◽  
Vol 8 (1) ◽  
pp. 104-114
Author(s):  
Tanneru Anusha ◽  
Nedunuri Sushma ◽  
M B Sai Rohit ◽  
A Akhil
Keyword(s):  
Research And Development ◽  
Positive Association ◽  
Financial Statements ◽  
Financial Statement ◽  
High Tech ◽  
Stages Of Development ◽  
Association Frequency ◽  
Intangible Investments ◽  
Start Ups ◽  
Funding Level

This paper represents the sample of entrepreneurs who are in the process of starting a business. At investigates the determinants of financial projections and statements in start-ups. The predictions information in economics is consistent. There is a positive association frequency of financial statement preparation concerning the use of outside funding, level competition, and venture scale. There are alternative influences and suggestions that benefit in reducing competition and uncertainty in fundamental variations to prepare financial statements. For instance, cash statements are more important for start-ups, and frequency varies among different financial statements with products in earlier stages of development and with greater competition. In contrast to this financial statements projections and regular forecasts of sales by start-ups are positively associated with the importance of intangible investments such as parents, research, and development. The start-ups in high –tech industries are used for projections. 

Characteristics and Determinants of New Start-ups in Gujarat, India

2020 ◽  
Vol 1 (2) ◽  
pp. 1-25
Author(s):  
Ajay Kumar ◽  
Bhim Jyoti
Keyword(s):  
Sample Size ◽  
Regression Models ◽  
New Products ◽  
Small Sample ◽  
The Body ◽  
High Tech ◽  
Annual Sale ◽  
Factors Affecting ◽  
Start Up ◽  
Start Ups

Purpose: This study examines the relationship of socio-economic characteristics of start-ups with their size in Gujarat, India. It also assesses the determinants affecting the annual sale of start-ups. Methods: It includes primary information based on a survey of 120 founders of start-ups. Linear and semi-log linear regression models have been applied to assess the determinants of start-ups. Probit regression models have been considered to assess the factors affecting the annual sale of the start-ups. Results: Stage of start-up, the participation of founders in conferences, educational qualification, and new products launched by start-ups, professional connections of founders, source of funding, and support from incubator/accelerator/supporting organizations are found crucial determinants of start-up size in Gujarat. The annual sales of the start-ups are positively associated with stage of start-up, support from a mentor, team members, founder's academic qualification, and collaboration with national or international organizations, unskilled workers. Implications: Technology transfer and commercialization, development of new products, government regulations, the requirement of costumers, free rights for entrepreneurs, appropriate financial support for new entrepreneurs, transparency and clarity in government policies, the establishment of high-tech start-ups, and development of digital infrastructure, increase in R&D spending in research academia, and association of research institutions with entrepreneurs would be conducive to create an appropriate start-ups ecosystem and to reduce regional development disparities across Indian states. Subsequently, it would be helpful to increase sustainable development in India.  Originality: This study has used primary information of 120 founders of start-ups to assess the determinants, and the factors affecting annual sales of start-ups using the regression model in, Gujrat, India. Thus, it has an empirical contribution to the body of knowledge. Limitations: This study could not provide rational justifications on most factors that show an insignificant impact on start-ups due to the small sample size. Further research, therefore, may be considered to identify the association of start-up size with the variables using a large sample size in India.  

Human Resource Blueprints in Irish High-Tech Start-up Firms

2006 ◽  
Vol 20 (2) ◽  
pp. 111-121
Author(s):  
Mary A. Keating ◽  
Mariabrisa Olivares
Keyword(s):  
Empirical Study ◽  
Human Resources ◽  
Human Resource ◽  
Human Resources Management ◽  
High Tech ◽  
Entrepreneurial Firms ◽  
Resources Management ◽  
Start Up ◽  
Research Findings ◽  
Start Ups

Focusing on Irish high-tech start-ups, this paper reports on the results of an empirical study of organization building by entrepreneurial firms, specifically in relation to human resource practices. The research findings are benchmarked with findings from SPEC, the Stanford Project of Emerging Companies (Baron and Hannan, 2002). Human resources management and entrepreneurial research have rarely been combined in the literature and there is no distinct body of work in the area of human resource management in entrepreneurial firms.

scholarly journals Comparing Bootstrapping High-Tech Start-Up Companies in the West and in a Transition Country

2020 ◽  
Vol 7 (1) ◽  
pp. 7-14
Author(s):  
Dragana Popovic Renella ◽  
Vojin Senk ◽  
Fuada Stankovic
Keyword(s):  
Essential Feature ◽  
High Tech ◽  
Information Feedback ◽  
Industrialized Countries ◽  
Transition Country ◽  
The West ◽  
Start Up ◽  
The One ◽  
Start Ups

This is a study of the process of the development of high-tech start-up companies through the mechanisms of bootstrapping in two extremely different environments: the one of highly industrialized countries, such as USA and Switzerland; the other of Serbia, which is a post-communist transition country with particular difficulties. The research method is the analysis of case studies. One case study of US and two of Swiss start-ups build the base for the analysis. All three cases show common patterns: from the very beginning, these companies sell R&D services in their fields of expertise; and using the cash from these early sales, and the information feedback from cooperation with the early customers, they develop their resources and, eventually, also their own high-tech products. The essential feature of this process is the selling of R&D services and the first products in the neighborhoods. Then also two cases of high-tech start-ups from Serbia are analyzed. Both Serbian start-ups are founded in partnership with small high-tech companies from highly industrialized countries (Switzerland and Germany). The Western partners use their reputations and contacts to enable the early sales of the Serbian start-ups in the industrialized countries. This is crucial for the Serbian start-ups, because they have no domestic market for R&D services. Apart of this element, all other essential patterns of the Serbian cases are very similar to those of the Western cases.

Enterprise survival in the high-tech community: persuasion and power in board decisions

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Ronit Yitshaki ◽  
Eli Gimmon ◽  
Susanna Khavul
Keyword(s):  
High Tech ◽  
Structured Interviews ◽  
Board Size ◽  
Term Survival ◽  
Long Term Survival ◽  
Content Type ◽  
Board Processes ◽  
Start Up ◽  
Start Ups

Purpose This study aims to examine the extent to which board size, the use of power by venture capital investors and entrepreneurs’ interpersonal tactics such as persuasion to sway board decisions, influence the long-term survival of start-ups. Design/methodology/approach This study used a mixed-methods approach. The quantitative part is based on data collected from 179 chief executive officers (CEOs) of high-tech start-ups community financed by venture capitalists (VCs) in Israel of which 59 did not survive. To achieve a better understanding of these findings, semi-structured interviews with 12 entrepreneurs were conducted. Findings Smaller boards were positively associated with venture survival. The use of power by VC investors positively influenced start-up survival. CEO persuasion had a negative effect on venture survival; however, its interaction with board size suggests that it had a lesser effect on very small boards. Practical implications Although investors’ control over decision-making contributes to long-term survival, entrepreneurs should be aware of the possible detrimental effects of exercising a high level of persuasion in board processes. The findings also suggest that a small board size is preferable for start-up survival. Originality/value Exploring the effect of board processes on venture survival is considered complex. A unique sample of high-technology start-ups consisting of both surviving and failed start-ups was analyzed to explore the effects of persuasion and power in board processes.

scholarly journals Start-Up Nation

2017 ◽  
Vol 31 (3) ◽  
pp. 350-388 ◽  
Author(s):  
Steven Fraiberg
Keyword(s):  
Technical Communication ◽  
High Tech ◽  
High Tech Industry ◽  
Methodological Nationalism ◽  
Start Up ◽  
The World ◽  
Per Capita ◽  
Actor Networks ◽  
Coworking Spaces ◽  
Start Ups

This study focuses on start-up entrepreneurs on the move—in coordination with an array of other actors—as they weave and are woven into transnational networks. Central to this study is a shift from activity to mobility systems. Building on technical communication scholarship, the frame integrates actor networks and activity theory knotworks. Disrupting workplace and national container models (methodological nationalism), the analysis is grounded in a study of Israeli start-up entrepreneurs. Dubbed the Start-Up Nation, Israel contains more start-ups per capita than any other country in the world, with its high-tech industry made up of a dense ecosystem of conferences, accelerators, meetups, social media, and coworking spaces. Tracing actants’ trajectories across this social field, the author argues for a conceptualization of entrepreneurs as knotworkers who mobilize genres, modes, languages, and spaces.

When the going gets tough, do the tough get going? The pre-entry work experience of founders and high-tech start-up survival during an industry crisis

2010 ◽  
Vol 29 (6) ◽  
pp. 626-647 ◽  
Author(s):  
Luca Grilli
Keyword(s):  
Work Experience ◽  
Theoretical Perspective ◽  
High Tech ◽  
Specific Work ◽  
Start Up ◽  
Technology Services ◽  
Information And Communication ◽  
Econometric Analyses ◽  
Start Ups ◽  
Boom Period

This article explores the possibility that under an intensely negative industry-specific shock, the positive relationship between the human capital of founders and the survival prospects of start-up businesses may actually be negative. Starting from a theoretical perspective to derive testable hypotheses, the study examines a sample of 179 Italian start-ups operating in the information and communication technology services market created during the boom period from 1995 to early 2000. Econometric analyses provide evidence that, during an intense industry crisis (that is, early 2000 to 2003) entrepreneurs with a substantial amount of prior work experience may pursue an exit strategy. This also highlights the importance of distinguishing between different types of work experience and different exit routes: founding teams with highly specific work experience show a higher probability of pursuing mergers and acquisitions (M&A), while a higher level of generic work experience is found to be more conducive to firm closure.

When startups exit: comparing strategies in Europe and the USA

2018 ◽  
Vol 39 (3) ◽  
pp. 26-33 ◽  
Author(s):  
Alessia Pisoni ◽  
Alberto Onetti
Keyword(s):  
Early Stage ◽  
High Growth ◽  
High Tech ◽  
Venture Capitalists ◽  
Content Type ◽  
Early Exit ◽  
Start Up ◽  
The Usa ◽  
Local Companies ◽  
Start Ups

Purpose The purpose of this paper is to present an overview of trends toward start-up exits. Exits represent the “end phase” of the start-up process, at least for the founders and the early investors. For high-growth venture-capital-backed companies, exits are often considered the ultimate goal of building a profitable venture. These ventures are intended from the beginning to harvest the financial value created by the business at some point in the future, and return capital to early investors. Design/methodology/approach The authors tracked 5,744 merger and acquisition transactions that have occurred between European and US tech start-ups since 2012. Data are drawn from CrunchBase, the most comprehensive database of high-tech companies and investors with information on the companies and investors around the world. The authors then compared the trends of acquisitions between European and US companies. Findings Results show that US companies are far more inclined to make acquisitions than European ones. Acquirers of start-ups, both from Europe and the US, prefer to buy local companies. However, recently, US companies have started to show more interest in European start-ups. Thus, signaling that the European start-up ecosystem is growing and becoming more attractive for US buyers. Furthermore, results show that start-up exits typically happen within a few years after a company’s establishment. Research limitations/implications The research does not take into consideration the price of the transaction, or the amount of capital invested by venture capitalists in the high-tech start-ups that have been acquired. Further research should address this specific problem by helping European start-ups understand how to plan the exit phase within few years from establishment. Practical implications The results have important implications both for entrepreneurs/managers and policymakers. Early exit appears to be a global trend among start-ups. This suggests that the exit phase should be properly planned to happen in the very early stage of the start-up process. On the other hand, the research also shows that there is still a gap to be filled in the European start-up ecosystems’ ability to produce exits and create new large innovative companies (the so-called “unicorns”). Originality/value To date, there has been a little research about exits for young high-tech ventures. This paper will attempt to shed new light on this so far under-explored issue by specifically analyzing exits as financial strategy for investors and entrepreneurs.

How Start-up Businesses View and Use Accounting in Early Year Operations

2020 ◽  
Vol 22 ◽  
Author(s):  
Contessa Hutchins
Keyword(s):  
Capital Investment ◽  
Sample Selection ◽  
Financial Statements ◽  
Debt Financing ◽  
Technology Industry ◽  
Start Up ◽  
Early Operations ◽  
Start Ups ◽  
Question Survey

This research analyzes how start-up companies implement accounting in their early operations and if that use of accounting (or lack thereof) has played a role in acquiring funding. Prior research shows that the quality of financial statements positively affects investing efficiency for companies in emerging markets (Chen et al., 2011). In this paper, we evaluate the hypothesis that start-ups using financial statements more extensively receive more outside funding than their counterparts. This was tested with a 27-question survey broken into three sections: demographic, accounting use, and financial information. There were 44 participants. The typical start-up profile is 5-6 years old, employs ten people, and identifies in the technology industry. Approximately 75% of participants reported using financial statements. While mostly viewed positively, some participants feel strongly against using standard accounting practices. Results showed companies who use financial statements more often reported a higher percentage of debt and investment funding received than those who used financial statements less frequently or not at all. In conclusion, accounting helps start-ups communicate higher quality information to investors, thus leading to a better chance of receiving capital investment/debt financing. This sample selection was not chosen randomly and is not a statistical depiction of the entire population.

General Electric: Investment Accounting and Consolidations

2002 ◽  
Vol 17 (3) ◽  
pp. 315-329 ◽  
Author(s):  
Walter G. Blacconiere ◽  
Patrick E. Hopkins
Keyword(s):  
Firm Value ◽  
Financial Statements ◽  
Financial Statement ◽  
Ratio Analysis ◽  
General Electric ◽  
Consolidated Financial Statements ◽  
General Electric Company ◽  
Accounting Disclosure ◽  
Economic Significance ◽  
Real World Setting

General Electric Company (GE) is a large, diversified corporation with hundreds of subsidiaries. As of December 31, 2000, GE had total consolidated assets of over $437 billion and a market capitalization of approximately $475 billion. This instructional case considers the use of GE's publicly reported financial statement data to illustrate the concepts and procedures related to (1) investment accounting under the equity method and (2) preparation of consolidated financial statements. In addition, the case highlights the effect of required consolidation on ratio analysis as well as the potential influence of accounting disclosure on investorsa' perceptions of firm value. Thus, this case should help you better understand the economic significance of relatively technical accounting procedures by analyzing their effects in a relevant, real-world setting.

Sign in / Sign up

Export Citation Format

Share Document