Start-up Performance: Looking for an Explanation in Entrepreneurial Characteristics and Financing Choice




start-ups, entrepreneurial characteristics, performance, financing choice


Although start-ups are gaining popularity and are known to have an important influence on the economy, surprisingly little research is available on these enterprises. One of the topics which remain to be explored concerns the performance of start-ups. So as to gain some insight into this phenomenon, we investigate the influence of characteristics of both the entrepreneur and the start-up (namely gender, age, education, experience, and start-up size). Thereby we base our arguments on the literature of SMEs and large companies, taking into account that start-ups behave differently than SMEs. Based on the translations of these arguments, we come to 5 hypotheses. However, since literature for SMEs and large companies is mixed and finds no unambiguous effect for these characteristics, this focus might limit to an incomplete overview. Therefore, we integrate the use of outside finance as a moderator, so as to find out whether the relations are influenced (strengthened or weakened) by the used financing source. The integration of this moderator is justifiable based on previous studies, where associations can be found between entrepreneurial characteristics and financing decisions on the one hand, but in addition, between financing decisions and performance on the other hand. So, it has been found that a firm’s success or failure depends heavily on its initial financing decision. Concerning the population of start-ups, studies show that the use of debt or any other form of external financing is associated with a better start-up performance. Based on a dataset of 117 Belgian start-ups, and making use of quantitative research, only the expected results concerning the level of education and gender could be confirmed. So, it is found that higher levels of education lead to better start-up performance, while no difference is found in the performance of start-ups led by female versus male entrepreneurs. At the same time, no significant interaction between any of the investigated characteristics and outside finance could be found. As such, it could not be confirmed that for start-ups using outside finance, the effect of the characteristics on performance will be different, compared to when they don’t use any form of outside finance.