Entrepreneurial teams and new venture funding: The social capital of teams altering the pecking order hypothesis

Robert V. Randolph, Kennesaw State University
Bart J. Debicki, Towson University
Rebecca G. Long, Mississippi State University


Building from existing research on the social capital of entrepreneurial teams, this study explores team affinity for external sources of startup capital. The objective of this research was to assess whether the pecking order hypothesis, which suggests that entrepreneurs will prefer specific forms of funding over others, would be confirmed in cases where a firm is founded by an entrepreneurial team due to differences in social capital. Our findings suggest that the pecking order hypothesis of startup capital acquisition strategies may not account for the distinct characteristics of entrepreneurial teams. By first replicating the pecking order hypothesis and subsequently testing its limitations, our study contributes to ongoing discussions regarding new venture startup strategies. Analyses of 738,058 firms support our arguments that teams are significantly more likely to violate the pecking order hypothesis than lone founders and that this relationship is strengthened in the case of family firms. The results presented herein should guide further research in social capital of entrepreneurial teams, explain some of the inconsistencies in research to-date regarding lone founders vs. team entrepreneurship in terms of capital acquisition, and aid entrepreneurs in their understanding of the preferred capital acquisition methods and selection of funding sources.