Money and knowledge: Sources of seed capital and the performance of high-technology start-ups

Equity seed capital for high technology entrepreneurial start-ups originates from multiple sources that include personal finance, private investors or angels, venture capital, government, and corporations. This research examines how the sources of seed capital and the structures of ownership control affect the performance of knowledge-intensive new ventures. The study measures firm performance in terms of innovation speed and finds that the structure of the firm's ownership control influences speed to product and the firm's resource position influences speed to market.; The research is grounded in a number of theoretical perspectives including resource dependence theory, resource based view of the firm, institutional theory, and agency theory. The hypotheses suggest that, through their control over equity, sources of seed capital influence the meso environments, the overall resource positions, and the performance of the high technology start-up firms. Israel's emerging high technology sector served as the study's empirical context. Primary data was collected with multiple methods and at multiple levels of analysis. The results are based on eighty-one qualitative case interviews, population level data on 1,679 firms, and cross-sectional and longitudinal survey data from a random sample of 120 founders/CEOs of lsraeli high technology start-ups whose firms had received financing from multiple sources. Hypotheses were tested using the Cox proportional hazard regression model.; The findings show that firms where institutional sources hold controlling interest in equity are not more likely to complete new product development or take products to market faster than firms where non-institutional sources hold controlling interest in equity. However, firms where the structure of equity control is mixed are significantly more likely to complete new product development and do so faster than firms where either institutional or non-institutional sources exclusively control equity ownership. In addition, firms with higher overall resource positions are significantly more likely to take products to market and complete first international sale. This dissertation contributes to the understanding of firm emergence, governance, and innovation speed. It has implications for entrepreneurs and managers selecting sources of seed capital, investors deciding on involvement with firms, and public policy-makers working to stimulate high technology and innovation.