Performance of new technology-based firms in the Federal Republic of Germany at the stage of market entry*

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Abstract
This paper is based on studies accompanying the German federal programme ‘Support of New Technology-Based Firms’ and the 246 young companies founded with the help of this support up to june 1988. It examines in detail the performance of 45 companies at the stage of market entry of their new products or processes and the growth perspectives of these companies. It tries to explain this performance by indicators of technology and its applicability, need and supply of capital, qualification of the team of entrepreneurs, and by activities preparing the market entry. Success at the stage of market entry - understood as running sales of equal products or services to different customers - is strongly influenced by the necessity for customer specific work before and after sales and by the novelty of either technology or detail solution within a known technology. These factors also determine the possibilities for advanced services to customers (so preparing the market entry), the need for capital and the difficulties of investors in calculating the risks of their investment. Time schedules of the market entry of New Technology-Based Firms are more prone to depend on the applicability or number of possible applications of the technology involved than on the skills and capability of their management team. Therefore the horizon of growth in these companies from the beginning of product development is longer than the normal horizon of venture capital funds.

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