Are business startups debt-rationed?

Using a large random sample of UK startups and a rich data set, the paper demonstrates that human capital is the 'true' determinant of survival and that the correlation between financial capital and survival is spurious. Provision of finance is demand-driven, with banks supplying funds elastically and business requests governing takeup. Firms self-select for funds on the basis of the human capital endowments of the proprietors with 'better' businesses more likely to borrow. A reason why others have seemingly identified startup debt-gaps may be the failure to test a sufficiently rich empirical model.