1. Do entrepreneurs get what they want? Entrepreneurs’ expectations prior to venture creation Casey Frid Pace University William Gartner Clemson University

2. nascent financing in the united states, 2005 - 2010 10 t% 25%50%75%90%95%99% $0$1,000$5,450$23,750$80,000 $200,000 $1.9 million

3. distribution of nascent financing in the u.s. 2005 - 2010

4. frequency & amount of funding by source, 2005 - 2010 sourcenmedianmedian after registration personal savings924$5,000$12,000 family188$4,000$12,000 $0 used184$0--- credit card170$4,000$5,600 bank loan120$15,000$25,000 friend & colleagues64$2,000--- 2 nd mortgage / car53$20,000--- other46$195,000$2,013 asset backed debt48$37,500---

5. (cont.) sourcenmedianmedian after registration bank line of credit45$20,000--- team loans33$10,000--- leases on equip.31$13,500--- supplier credit27$5,000--- employees5$4,000 sba backed loans3$55,000--- venture capital3$60,000--- gov. (non sba)1$2,000---

6. differences in finance items psed I and psed II  psed I  expected vs. acquired financing  debt and equity  mail in questionnaire items (QD1C QD1J QD1K)  haphazard items from wave to wave  psed II  pre-/post- registration financing  Better coordination among waves  both contain items on financial planning

7. sources of funding psed I – wave q variable numbersource of funding q266Have you asked your spouse or household partner for funding? q266aWas the answer yes, no, or is the request still pending? q268How much do you expect from your spouse or household partner? q270team member spouse/partner q272friends & family q274team member friends & family q276employer

8. (cont.) variable numbersource of funding q277a2 nd mortgage q279bank q281sba q282acredit cards q284venture capitalists q286personal finance company q288other

9. sources of funding psed I – waves r, s, t variable numbersource of funding r770 s770 t770total equity, all sources r770a s770a t770atotal debt, all sources r771x s771x t771xpersonal cash contributions (savings, 2 nd mortgage, credit card, personal finance firm) r772x s772x t772xteam member personal cash contributions r773x s773x t773xfamily of founder r773b s773b t773bfamily borrowing on assets r774x s774x t774xfriends & business associates

10. (cont.) variable numbersource of funding r775x s775x t775x r77501 s77501 r77502 s77502 (etc.) banks (sba guarantee, personal finance company, vc firms, other institutions) r776x s776x t776xprivate investors r777x s777x t777xfederal, state, or local gov. agencies r778x s778x t778xsuppliers r780 s780 t780other

11. start-up capital expectations  qd1c: how certain are you that the business will be able to… Obtain start-up | capital: | Freq. Percent Cum. ---------------------+----------------------------------- Does not apply | 100 18.28 18.28 Very low certainty | 40 7.31 25.59 Low certainty | 87 15.90 41.50 Neither high nor low | 149 27.24 68.74 High certainty | 107 19.56 88.30 Very high certainty | 64 11.70 100.00 ---------------------+----------------------------------- Total | 547 100.00

12. Obtain a banks help: | Freq. Percent Cum. ---------------------+----------------------------------- Does not apply | 123 22.45 22.45 Very low certainty | 66 12.04 34.49 Low certainty | 98 17.88 52.37 Neither high nor low | 147 26.82 79.20 High certainty | 63 11.50 90.69 Very high certainty | 51 9.31 100.00 ---------------------+----------------------------------- Total | 548 100.00 Obtain venture | capitalists help: | Freq. Percent Cum. ---------------------+----------------------------------- Does not apply | 190 34.61 34.61 Very low certainty | 85 15.48 50.09 Low certainty | 67 12.20 62.30 Neither high nor low | 138 25.14 87.43 High certainty | 48 8.74 96.17 Very high certainty | 21 3.83 100.00 ---------------------+----------------------------------- Total | 549 100.00

13. external $: certainty by gender | R GENDER :NANCY Obtain start-up | CARTER CLEANED capital: | Male :CA Female:CA | ---------------------+----------------------+ Does not apply | 30 70 | | 11.36 24.73 | ---------------------+----------------------+ Very low certainty | 21 19 | | 7.95 6.71 | ---------------------+----------------------+ Low certainty | 55 32 | | 20.83 11.31 | ---------------------+----------------------+ Neither high nor low | 66 83 | | 25.00 29.33 | ---------------------+----------------------+ High certainty | 56 51 | | 21.21 18.02 | ---------------------+----------------------+ Very high certainty | 36 28 | | 13.64 9.89 | ---------------------+----------------------+ Total | 264 283 | | 100.00 100.00 |

14. bank $: certainty by race | R ETHNIC :NCRACE Obtain a banks help: | WHITE BLACK HISPANIC/ OTHER | ---------------------+--------------------------------------------+ Does not apply | 88 23 9 1 | | 23.78 17.83 30.00 7.14 | ---------------------+--------------------------------------------+ Very low certainty | 45 16 3 2 | | 12.16 12.40 10.00 14.29 | ---------------------+--------------------------------------------+ Low certainty | 65 20 9 4 | | 17.57 15.50 30.00 28.57 | ---------------------+--------------------------------------------+ Neither high nor low | 101 35 5 4 | | 27.30 27.13 16.67 28.57 | ---------------------+--------------------------------------------+ High certainty | 40 20 1 2 | | 10.81 15.50 3.33 14.29 | ---------------------+--------------------------------------------+ Very high certainty | 31 15 3 1 | | 8.38 11.63 10.00 7.14 | ---------------------+--------------------------------------------+ Total | 370 129 30 14 | | 100.00 100.00 100.00 100.00 |

15. bank $: acquired by race | R ETHNIC acq_bank | WHITE BLACK HISPANIC/ OTHER | -----------+--------------------------------------------+ 1 | 65 11 1 1 | | 55.08 23.91 14.29 20.00 | -----------+--------------------------------------------+ 2 | 53 35 6 4 | | 44.92 76.09 85.71 80.00 | -----------+--------------------------------------------+ Total | 118 46 7 5 | | 100.00 100.00 100.00 100.00 |

16. acquired funds  total capital acquired  males=$95,383; females=$71,018  whites=$107,765; African-Americans=$37,288; Hispanics=$41,730  post-college degree=$191,221; no high school degree=$66,818  external capital acquired  males=$75,750; females=$53,000  whites=$82,806; African-Americans=$18,259; Hispanics=$10,112

17. acquired funds (cont.)  bank funds acquired  males=$41,905; females=$31,103  whites=$47,232; African-Americans=$6,542; Hispanics=$0  post-college=$75,000; no high school=$74,000  personal funds used  males=$50,398; females=$37,935  whites=$53,508; African-Americans=$27,087; Hispanics=$38,161  post-college=$78,156; no high school degree=$33,893

18. findings (expectations by gender)  similar levels of certainty regarding external funding acquisition  …although females with low expectations say funding doesn’t apply while males express low certainty

19. findings (expectations by race)  no differences in level of certainty in obtaining external funding  …though 70% of Hispanics say obtaining bank funding does not apply or is unlikely  among those seeking bank financing, only 23% of African-Americans and 14% of Hispanics acquired it compared to 55% of whites  25% of whites acquired external funds compared to 14% of African-Americans and 12% of Hispanics

20. findings (expectations by education)  external capital expectations are similar  …though 21% of those without a high school degree expressed very high certainty of obtaining external capital  …and 17% for VC, and 26% for banks  90% without a high school degree failed to acquire external funds

21. moving forward  are females more realistic when setting expectations?  how does this translate into goal accomplishment / actions / behaviors?  ignorance is bliss? does less formal education lead to over-optimistic expectations?  expectation or location? minority acquisition of bank financing

22. contact: cj.frid@gmail.com gartner@clemson.edu Casey Frid Pace University William Gartner Clemson University