A Comparative Study on Financial Markets for Entrepreneurs: A Perspective on Equity Approach in the Asian Startup

[Purpose] This study examines the comparative advantages of finance in East Asia and Europe.　For startups, venture capital funding is often raised through equity financing. This paper distinguishes whether each country’s financial market is equity－centric or bank－centric and explains this in relation to entrepreneurship. [Methodology] This study focused on Kirzner’s pioneering research on the “business opportunity recognition process” within entrepreneurial theory in classical economics, represented by the Austrian School. To empirically test this, we compared entrepreneurial rates and ease of financing based on Global Entrepreneurship Monitor (GEM) statistical data, analyzing their correlation using econometric methods. Simultaneously, we clarified the relationship between cultural challenge orientation, the culture supporting it, and financing. [Findings] This study examines the differences in equity financing between Asian startups like those in South Korea and Taiwan and European financial markets like the U.S and U.K, and Germany exploring the potential for startups tailored to the characteristics of each financial market. As a result, the United States and the United Kingdom showed a dominance of financial markets in their stock markets, while Japan and Germany exhibited a dominance of bank lending. [Implications] In East Asia, both South Korea and Taiwan fall somewhere in between. However, when considering the future of startups in Japan, the financing characteristics for venture companies in Taiwan, and especially South Korea, offer many valuable perspectives.