The provision of finance to innovation: A survey conducted among Italian technology-based small firms

Financial constraints to the development of innovation are often considered one of the main impediments to high-technology firms seeking to expand and grow. In particular this is the case of small and medium size high-tech fi rms. In the U.S. and the U.K. a variety of sources of finance are available to the start-ups of innovative firms; in the other European countries, and particularly in Italy, these means are still uncommon so that the developm ent of technology is often prevented. This paper, based on an empirical ana lysis on a survey of 46 small high-tech Italian firms, aims at exploring th e problems experienced by small businesses in gaining access to debt and eq uity finance. The results highlight that traditional financial sources are inadequate to finance innovative projects. The questioned firms rely mainly on personal finance, and secondly on short term bank debt; they are truly involved in maintaining control over the firm activities and are willing to issue outside equity only if the new investors also provide non financial competencies. Among the 46 interviewed firms, only 10 are willing to be lis ted in the future on small firms' stock markets.