Kacer, M., Wilson, N. orcid.org/0000-0001-5250-9894, Zouari, S. et al. (1 more author) (2025) Entrepreneurial finance and the survival of equity-funded firms in crisis periods: the case of COVID-19. Small Business Economics. ISSN 0921-898X
Abstract
This study investigates the resilience of 13,786 UK entrepreneurial firms that received equity financing before COVID-19, with 653 becoming insolvent and 6254 securing guaranteed loans during the pandemic. Utilising the resource-based view (RBV) and signalling theories, we hypothesise that equity-backed firms have sufficient resources to withstand crises, varying by investor type and involvement. We compare the bankruptcy risk of these firms during COVID-19 to the pre-COVID period, considering investor type, deal history and financial and non-financial factors. Results show similar insolvency rates during COVID-19 compared to pre-COVID, but firms backed by active investors are less likely to become insolvent during crises. We examine the characteristics of loan recipients, financing combinations and insolvency risk, finding that companies using COVID loans were generally more prone to insolvency, except those backed by active investor types. Our findings offer insights into the role of equity financing across various investor types in venture survival during crises, with policy implications.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © The Author(s) 2025. This is an open access article under the terms of the Creative Commons Attribution License (CC-BY 4.0), which permits unrestricted use, distribution and reproduction in any medium, provided the original work is properly cited. |
Keywords: | COVID-19, Entrepreneurial firms, Bankruptcy, Government interventions, Equity investors, Active investors |
Dates: |
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Institution: | The University of Leeds |
Academic Units: | The University of Leeds > Faculty of Business (Leeds) > Accounting & Finance Division (LUBS) (Leeds) |
Funding Information: | Funder Grant number ESRC (Economic and Social Research Council) ES/W010259/1 |
Depositing User: | Symplectic Publications |
Date Deposited: | 18 Feb 2025 11:33 |
Last Modified: | 18 Feb 2025 11:33 |
Status: | Published online |
Publisher: | Springer |
Identification Number: | 10.1007/s11187-025-01009-2 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:223433 |