G. Giudici et S. Paleari, The provision of finance to innovation: A survey conducted among Italian technology-based small firms, SMAL BUS EC, 14(1), 2000, pp. 37-53
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.