ENTREPRENEURS’ KNOWLEDGE ABOUT FINANCING ALTERNATIVES: IMPACT OF HUMAN AND SOCIAL CAPITAL

This paper examines how entrepreneurs’ human and social capital influence their knowledge of finance alternatives. For this purpose, we use survey data from 125 Belgian start-ups. Results demonstrate that entrepreneurs with an education in the field of business and entrepreneurs with experience in accounting or finance have a broader knowledge of finance alternatives. This is especially the case for the less commonly used finance alternatives. Having indirect ties to people with knowledge of finance also enhances the total knowledge of finance alternatives. However, more generic human capital, such as prior entrepreneurial experience and direct ties have no impact on entrepreneurs’ knowledge of finance alternatives. Overall, this study demonstrates how not only supply side factors, but also demand side factors are constraining entrepreneurs in their search for finance.