ŠAVŠ/TAČR Digital Czechia in a Digital Europe
Supporting Startups as a Way to Digitalization Josef Horák A startup is a business scheme that above all aims to satisfy a specific problem or demand that arises in the market. 1 The idea is essentially a completely innovative and unique one. However, it is not in itself associated with a certain future prosperity. In order to successfully implement the idea, it is necessary to first develop a business plan, based on which it will be possible, with a certain degree of reliability, to analyze whether the project will have a chance to succeed in the market or not. 2 The business plan created in this way also serves as a tool through which it will be possible to obtain initial funding for the future start of a newly established business entity, provided that the startup will be viable. Startups show the possibility of exponential growth and potentially high profitability compared to the usual business plans, which are implemented in the field of small and medium-sized enterprises. However, the business risk of startups is enormously high and for this reason it is very difficult for these businesses to obtain, in their initial phase, foreign capital from financial institutions. 3 Similar barriers can be seen in the effort to finance the launch of these businesses through an initial public offering (IPO). Therefore, if the founders do not have a sufficient amount of their own funds, or do not find a creditworthy investor who will provide the initial funds for the launch and expansion of the company, it could happen that potentially viable companies will never be established either due to the impossibility of financing the relevant business activities.
1 Weiblen Tobias, Chesbrough Henry, Engaging with startups to enhance corporate innovation, California Management Review, Vol. 57, No. 2, pp. 66-90. 2 Egan-Wyer Carys, Muhr Sara, Rehn Alf, On startups and doublethink–resistance and conformity in negotiating the meaning of entrepreneurship, Entrepreneurship & Regional Development, Vol. 30, No. 1-2, pp. 58-80. 3 Hanssens Jürgen, Deloof Marc, Vanacker Tom, The evolution of debt policies: New evidence from business startups, Journal of Banking & Finance, Vol. 65, pp. 120-133.
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