Entrepreneurial finance and the survival of equity-funded firms in crisis periods

The case of Covid-19

Datos Bibliográficos

ID14868492
AutoresMarek Kacer (0000-0002-3544-0327, University of Leeds, autor de correspondencia), Nick Wilson (0000-0001-5250-9894, University of Leeds), Nicholas Wilson (0009-0000-3948-6675), Sana Zouari, Marc Cowling (0000-0001-5731-8712, Oxford Brookes University)
Año2025
Volumen65
Número2
Páginas837-870
Fecha de publicación2025-08-01
Peer ReviewedSí
Open AccessSí
TipoARTICLE
RevistaSmall Business Economics (JOURNAL)
Identificadores de la revistaISSN: 0921-898X • E-ISSN: 1573-0913
EditorialSpringer Science and Business Media LLC (PUBLISHER)
DOI10.1007/s11187-025-01009-2
OpenAlexW4407591547
IdiomaEN
Citas recibidas2
Referencias citadas95

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

Bankruptcy · Business · Coronavirus disease 2019 (COVID-19 · Economics · Entrepreneurship · Equity (law · Financial system · Insolvency · Loan · Corporate Finance and Governance · Private Equity and Venture Capital · Working Capital and Financial Performance · Finance · Internal Medicine