Realize the Dream By Dar Sheperd In the history of the United States, there has never been a greater focus on entrepreneurial development than now. Why? Because the economy continues to suffer and we are undergoing a fundamental shift in how business is performed here at home and around the world. How does an aspiring entrepreneur position themselves to succeed when the majority of small businesses fail? In a recent article published by Alyson Shontell for Entrepreneur magazine, the answers as to why businesses succeed and fail were documented. Paul Gompers, Anna Kovner, Josh Lerner and David Scharfstein set out to find why some entrepreneurs are more successful than others. They put together a Harvard Business School working paper entitled, Performance Persistence in Entrepreneurship. Here is a summary of their findings:
This article is a re-printed from the February 2011 edition, as approved by the UP Business Today
ter at identifying potential 10. Who receives a higher success and they bring initial valuation, seasoned greater value to the start-up. entrepreneurs or new ones? 6. If a company's founder Answer: New entreprehas been successful before, neurs. how important is the VC? Answer: If a startup is Real Odds: Only 3,000 founded by previously suc- patents out of 1.5 million cessful entrepreneurs, then are commercially viable, acthe VC firm doesn't really cording to Richard Maulsmatter. by, Director of Public Affairs for the U.S. Patent & Trademark Office. 7. Where do most entre2. Who is more likely to preneurs get their ideas Trade Secret: Many aspirget funded by a VC firm, a from? ing entrepreneurs believe new entrepreneur or a Answer: From former em- there is abundant governployers. tried and true one? ment money available to Answer: A new entrepre- 8. Will VCs give the same start a new business venture. neur. entrepreneur funding on This belief is simply not true. We suggest you do 3. Is entrepreneurial suc- their next venture? Answer: Not usually. You'd your homework and begin cess a skill, or is it luck? working with experienced Answer: Starting a com- think successful entrepre- professionals who have pany at the right time in the neurs would have no prob- achieved entrepreneurial lem getting funding from right industry is a skill. success themselves. venture capital firms that 4. Does success breed suc- previously backed cess? them...but you'd be wrong. Dar Shepherd is Project Answer: Yes. EntrepreCoordinator for the e-Loft neurs with previous suc- 9. Who closes VC funding (www.theeloft.com), the cesses can mobilize more quicker, serial entrepre- business information hub resources based on their neurs or newbies? for aspiring entrepreneurs. Answer: Serial entreprepast success. The e-Loft provides conneurs receive venture capisulting and coaching ser5. Are companies that are tal sooner than first-time vices, educational funded by VC firms more entrepreneurs. programs, and venture likely to succeed? capital. Answer: Yes. VCs are bet1. Do serial entrepreneurs succeed more than first time entrepreneurs? Answer: Yes. According to the Harvard researchers, there is performance persistence in entrepreneurship. The authors noted, "All else (being) equal, a venturecapital-backed entrepreneur who succeeds in a venture has a 30 percent chance of succeeding in his next venture."