The recent financial crisis, start-up financing and survival

We investigate the effects of the recent financial crisis on start-up financing and survival using a dataset that covers all Belgian new business registrations between 2006 and 2009. We find that bank debt is the single most important source of funding, even for start-ups founded during the crisis. However, start-ups founded in crisis years use less bank debt and have a higher likelihood of bankruptcy, even after controlling for their creditworthiness. These effects are stronger for start-ups that are more dependent on bank debt, such as start-ups founded in bank dependent industries and start-ups founded by entrepreneurs who are more likely to be financially constrained.