ECIC academic, Dr Gary Hancock, has explored the age old question of ‘should I source money from my family when financing a new business venture’ in his PHD thesis, with surprising results.
Dr Hancock found that family financing was more common than people may think, with over 83% of Australian entrepreneurs who require some finance to start a business receiving funds from family or friends. However, he also found that despite popular belief, within-family financing isn’t necessarily foolish.
This could be for a number of reasons, for example money is often only given if the financier is willing and able to lose it and due to the relationship this lending often can result in a joint-vested interest in the new venture, which can bring people closer together.
Also, entrepreneurs who accept money to start their new venture often display a high level of care to their relationships. Combined with their strong sense of future and determination to succeed, these entrepreneurs often work hard to succeed to repay the trust that has been shown to them.
These findings from Dr Hancock’s research provide fantastic insights into one of the many considerations that entrepreneurs face when starting out in commercialising their big idea, and students can benefit greatly from having this knowledge here in the ECIC.
There has been great interest in Dr Hancock’s research Australia wide, and he has given a number of radio interviews to discuss further.