Follow the money: funding acquisition processes of nascent ventures

Answering the call for more process-oriented research into the inception and development of companies, this paper analyses the funding acquisition process of nascent ventures. Based on optimal matching techniques combined with multinomial logistic regression, we identify how the most typical funding acquisition processes of nascent ventures evolve and identify in which circumstances ventures pursue the respective processes. First, and in line with pecking-order theory (POT), we find a standard pattern of founder self-funding. Second, we theorize under which initial conditions, and how, ventures deviate from the path that is set out by POT. The degree of innovativeness and complexity of the venture's offering determine which funding sequence is chosen. With this study we, first, show the importance of initial venture characteristics and strategy for the further resource acquisition and corresponding venture development process and, second, introduce the optimal matching technique to the realm of the entrepreneurship literature.