Abstract

Standard explanations of the decisions made by new firm founders when acquiring financing to start ventures tend to refer to the efficiency and economic rationales underpinning such choices. In this paper, a pecking order approach is applied to twenty-six cases of new venture creation to test such ‘rational actor’ approaches. When pecking order considerations are extended to incorporate previous experiences of acquiring finance and perceptions of the ease and feasibility of doing so, a fuller explanation of decisions and patterns in new venture financing emerges. A key implication of this analysis is the need to consider the experiential and knowledge base of founders when seeking to understand the dynamics and drivers of new business funding.