Serial entrepreneurs attract success, but don't need top VCs |
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Serial entrepreneurs attract success, but don't need top VCs
Source: Harvard Business School
Seattle venture capitalists love to back serial entrepreneurs, from Madrona Venture Group's investments with Sunny Gupta (Apptio, iConclude, Performant) to Voyager Capital's bets on Bill Valenti (Tegic, Melodeo).
There's good reason for this. After all, the theory goes that if entrepreneurs can make money once, they are likely to do it again. Now, there's research to back up that theory. A study by Harvard Business School [PDF, 35 pages] indicates that successful serial entrepreneurs have a 30 percent chance of success in their next venture-backed company. That compares to a 22 percent success rate for entrepreneurs who previously failed and a 21 percent success rate for first-time entrepreneurs.
The study also finds that experienced entrepreneurs are more likely to start a company at the right time, a factor that the Harvard professors describe as "market timing skill." And it notes that serial entrepreneurs are just as likely to be successful with a top-tier venture firm as they are with a lower-tier firm.
"Essentially, venture capital firm experience has a minimal effect on the performance of entrepreneurs with good track records," the authors write. "Where venture capital firm experience does matter is in the performance of first-time entrepreneurs and serial entrepreneurs with histories of failure." Fascinating stuff
Hat tip to Connie Loizos at PEHub, who covered the study earlier today. She was surprised that first-time and failed entrepreneurs have as good a shot as they do. Noting the one in five chance of success, Loizo writes: "Those are way better odds than you’ll find in, say, the restaurant business."
What do you think? Are serial entrepreneurs better positioned for success? And what about the first time entrepreneurs -- Bill Gates and Paul Allen at Microsoft; Sergey Brin and Larry Page at Google and Jeff Bezos at Amazon.com -- who were able to bring an entirely new perspective to an industry?
It would be interesting to analyze the wealth created by first-time entrepreneurs versus serial entrepreneurs.
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