Nascent Social Entrepreneurship, Startup Financial Support, and Societal Stereotypes

Abstract

In nascent entrepreneurship, firm and owner characteristics are often the main factors that lenders use to evaluate potential borrowers. But the literature on social entrepreneurs’ startup financing is limited, most likely due to the novelty and uniqueness of their efforts. Using the societal stereotypes perspective and a double hurdle estimation approach on a nationally representative sample of U.S. nascent entrepreneurs, we find that social entrepreneurs are less likely to receive and receive less financial support than their counterparts. However, we find evidence that social entrepreneurs with more startup experience and/or current ownership of other businesses are more likely to receive and receive larger amounts of financial support than their counterparts. This is not the case for money motivated entrepreneurs who are already seen as competent.