1. Abstract
This research investigates the financing options available to a “High-Tech
Start-up” when a technical person seeks to start a business from innovations
emerging from his or her daily work. In seeking to understand the different
factors which might influence the choice of a particular type of financial
source, firstly a thorough literature survey has been performed. A qualitative
research approach was considered to be the most appropriate one and as
part of it, a number of interviews with entrepreneurs, CEOs and CTOs have
been conducted. Findings from these people with financial experiences are
studied, analysed and compared, to select a suitable financing option for a
photonics start-up originating from the work inside a research institute.
Considering the amount of capital required to start a semiconductor
start-up, private equity based Venture Capitalist (VC)s are thought to be the
most appropriate funding source for such type of high-tech start-ups. This
research finds out the different aspects of VC funding and the creation of
favorable environments to attract more VC investment in the area of
semiconductor start-ups. As it is found out, the VCs bring much more than
the finance. The role of the VCs in the start-up extends way beyond the
traditional financial aspect, based on their experience and expertise in
different areas, they are deeply associated with the managing and mentoring
of the firms they finance.
It can be concluded that although VCs are not the only solution for
every stage of financing a high-tech start-up and the entrepreneur needs to
be innovative in financing the new venture. Also, the interaction between the
entrepreneurs and the venture capitalists is not immune to conflicts; both
sides need to promote mutual understanding in order to bring success to the
“high tech start-up”.