Finding Friends, Family and Fools

Ben SpigelCreative Economies

70%Aldrich, 1999

100

125

150

175

200

2000

Q1

2000

Q3

2001

Q1

2001

Q3

2002

Q1

2002

Q3

2003

Q1

2003

Q3

2004

Q1

2004

Q3

2005

Q1

2005

Q3

2006

Q1

2006

Q3

2007

Q1

2007

Q3

2008

Q1

Housing Price Index (2000 = 100)

There are 5 times more funds available through informal capital

than through formal channels

Reynolds et. al, 2002

Formal sources of capital

Informal sources

of capital

Credit card application

Venture Capital

Angel Investment

Loan from family members and spouse

Self capitalization

Sources of Capital

Culture affects how entrepreneurs access financing

Culture is almost impossible to define• Ethnic culture

• National culture

• Family culture

• Popular culture

• Modern culture

• Traditional culture

• Regional culture

• Local culture

• Corporate culture

• Organizational culture

• Foreign culture

• Petri dish

How do we think about culture in entrepreneurship?

Firm Formation

Entrepreneur

Formal Capital

Informal Capital

•Social capital•Social networks•Ethnic/cultural ties

•Human capital•Venture capital•Business networks

•Regional culture•National/local tax policies

The Entrepreneur

National Culture

Regional Culture

Ethnic Culture

Religious Culture

Family Culture

Where do we go from here?