Identifying and Prioritizing the Most Common Methods of Bootstrap Financing in IT-based Start-ups

Document Type : Research Paper

Authors

1 Assistant Prof., Faculty of Entrepreneurship,University of Tehran, Iran

2 Associate Prof., Department of Business, Faculty of Entrepreneurship, University of Tehran, Iran

3 MSc in Entrepreneurship, Faculty of Entrepreneurship, University of Tehran, Iran

Abstract

Employing the most effective method for financing has been critically challenging for those who start an entrepreneurial business. This study aimed to identify and prioritize the most common methods of bootstrap financing used by IT-based start-ups through a mixed method. The authors carried out semi-structured interviews with the experts highly experienced in the IT industry and involved in start-ups’ financing. Using the bootstrap financing method emerged from the interviews, in the quantitative phase, the authors administered the pair-wise comparison and Likert scale questionnaires among the participants and the AHP technique was used to prioritize each method. In the qualitative section, the authors determined the sample size using the adequacy of the data logic, and for the quantitative phase, the authors used Cochran’s formula and a sample of 220 participants was chosen by the simple random sampling method. The results of this study showed that private owner financing cluster obtained the highest position in terms of priority. Deferred payments, stopping receivable accounts, minimizing capital expenditure and using shared resources were respectively the next bootstrap financing priorities of the entrepreneurs.

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References

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