Seed Capital and the Investment Equation in Entrepreneurship

Abstract

Seed capital investments by incubators in El Salvador over a specific time horizon is a topic that has been little studied in developing economies. The same applies to the relationship between these investments and the increase in entrepreneurial projects managed by them.

Traditionally, entrepreneurship in El Salvador has been the focus of various international and national funds, resulting in a database of some of the most common entrepreneurship funds in the country. In recent years, it is hypothesized that the increase in projects may be due to the annual increase in funding for entrepreneurial initiatives and, therefore, entrepreneurship at the national level may be discouraged if some currently operating incubators are left without funds.

This exploratory and descriptive study used econometric regressions. The document proposes an investment function in entrepreneurship that models the growing behavior of projects in seed capital funds. In addition, an attempt is made to propose an equation model for incubators in the sample based on capital invested over a time horizon, called the investment equation in entrepreneurship. It also presents a discussion on future investments in entrepreneurship, which may contribute to understanding the creation of new companies and seed capital investment over time.