There has been a tendency for public and private industrial support agencies to adopt a common approach to providing aid to new high-technology firms, both at the time of start-up, and during the early years of the business.



This systematic analysis confirms that such a crude approach to high-technology new firm funding is inappropriate, since the potential for rapid early growth varies sharply between the three high-technology sectors of biotechnology, software and electronics, which were examined. A close investigation of the sectoral variations in the formation and early growth characteristics of new firms in these sectors provide valuable insights on both policy and theory. In particular, it is noted that the formation skills of the founder (or founders) have a strongly determining influence on the scope for choice of the founding technological base of the firm. In turn, exploitation of the initiating technology may involve substantial expenditure prior to any return on such investment. Indeed, seen in this light, many high-technology "growth" sectors appear to have been defined by high levels of expenditure rather than net income, which is not a recipe for rapid returns on investment.