An Empirical Analysis of Initial Capital Structure and Subsequent Firm Value of TIPS-Supported Startups

Purpose: This study empirically examines the relationship between the initial capital structure and subsequent firm value of startups supported by the Technology Incubator Program for Startup (TIPS). Previous studies have primarily focused on the independent effects of government research and development (R&D) support, private investment, or the overall performance of the TIPS program. However, relatively few studies have examined the relationship between subsequent firm value and the components of the initial capital structure by considering investment size and ownership structure in an integrated manner.Methods: Based on Signaling Theory and Agency Theory, this study examines the relationships between operator investment, government R&D grants, private investment secured at the time of TIPS selection, operator equity ownership, and subsequent firm value. The analysis uses data from the 2024 TIPS Performance Survey conducted by the Korea Business Angels Association in 2025. The survey covered companies selected for the TIPS program through 2024. After excluding observations with missing values in the variables used for the regression analysis, the final sample consists of 874 startups. Multiple linear regression analysis was conducted to examine the relationships between the initial capital structure and subsequent firm value.Results: The results show that operator investment, government R&D grants, and private investment secured at the time of TIPS selection have significant positive relationships with subsequent firm value, whereas operator equity ownership has a significant negative relationship with subsequent firm value. Firm age is not statistically significant. Among the explanatory variables, private investment secured at the time of TIPS selection has the largest absolute standardized regression coefficient, indicating the strongest positive relationship with subsequent firm value among the variables examined.Conclusion: The findings suggest that the investment components of the initial capital structure can function as important signals of a startup's growth potential and market prospects. In particular, private investment secured at the time of TIPS selection appears to be an important indicator of external investors' evaluation of startup potential. The negative relationship between operator equity ownership and subsequent firm value also suggests that ownership structure should be considered alongside investment size when designing the initial capital structure of TIPS-supported startups. These findings provide implications for improving the operational framework of TIPS and policies supporting technology-based startups.