Financing Preference among Technology Startups (TSs) in Malaysia

Abstract

As the maverick of the new economy TSs are making economic waves across industries. However at their early stages TSs are fragile and vulnerable. Startups struggle with many issues starting from business planning, capacity building and management, but financing is key to their survival and growth. Governments play pivotal role in financing TSs at their early stages and so do venture capital. This study measures financing and its’ correlation to culture, innovation, government financing and private investments (venture capital and angel investors). It also examines if Islamic Finance play any role in financing TSs. Findings show that innovation and government financing are significant in later stage financing and results indicate that venture capitalists and investors are more likely to finance female technopreneurs than their male counterpart. Despite high awareness levels among technopreneurs findings indicate that Islamic Finance is highly insignificant among TSs. This study is an important contribution in the startup and entrepreneurship space as it identify financing determinants for TSs in the Malaysian startup ecosystem. Further studies are recommended in the area of securitization of assets and intellectual property to enable to TSs to financing their venture via Sukuk or other forms of Islamic securities.