Realize the Dream

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Realize the Dream This article is a re-printed from the February 2011 edition, as approved by the UP Business Today By Dar Sheperd In the history of the United States, there has never been a greater focus on entrepre- neurial 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 aspir- ing entrepreneur position themselves to succeed when the majority of small busi- nesses fail? In a recent article published by Alyson Shontell for En- trepreneur magazine, the answers as to why busi- nesses succeed and fail were documented. Paul Gomp- ers, Anna Kovner, Josh Lerner and David Scharf- stein 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 Entrepre- neurship. Here is a summary of their findings: 1. Do serial entrepreneurs succeed more than first time entrepreneurs? Answer: Yes. According to the Harvard researchers, there is performance persis- tence in entrepreneurship. The authors noted, "All else (being) equal, a venture- capital-backed entrepreneur who succeeds in a venture has a 30 percent chance of succeeding in his next ven- ture." 2. Who is more likely to get funded by a VC firm, a new entrepreneur or a tried and true one? Answer: A new entrepre- neur. 3. Is entrepreneurial suc- cess a skill, or is it luck? Answer: Starting a com- pany at the right time in the right industry is a skill. 4. Does success breed suc- cess? Answer: Yes. Entrepre- neurs with previous suc- cesses can mobilize more resources based on their past success. 5. Are companies that are funded by VC firms more likely to succeed? Answer: Yes. VCs are bet- ter at identifying potential success and they bring greater value to the start-up. 6. If a company's founder has been successful before, how important is the VC? Answer: If a startup is founded by previously suc- cessful entrepreneurs, then the VC firm doesn't really matter. 7. Where do most entre- preneurs get their ideas from? Answer: From former em- ployers. 8. Will VCs give the same entrepreneur funding on their next venture? Answer: Not usually. You'd think successful entrepre- neurs would have no prob- lem getting funding from venture capital firms that previously backed them...but you'd be wrong. 9. Who closes VC funding quicker, serial entrepre- neurs or newbies? Answer: Serial entrepre- neurs receive venture capi- tal sooner than first-time entrepreneurs. 10. Who receives a higher initial valuation, seasoned entrepreneurs or new ones? Answer: New entrepre- neurs. Real Odds: Only 3,000 patents out of 1.5 million are commercially viable, ac- cording to Richard Mauls- by, Director of Public Affairs for the U.S. Patent & Trademark Office. Trade Secret: Many aspir- ing entrepreneurs believe there is abundant govern- ment money available to start a new business venture. This belief is simply not true. We suggest you do your homework and begin working with experienced professionals who have achieved entrepreneurial success themselves. Dar Shepherd is Project Coordinator for the e-Loft (www.theeloft.com), the business information hub for aspiring entrepreneurs. The e-Loft provides con- sulting and coaching ser- vices, educational programs, and venture capital.
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In the history of the United States, there has never been a greater focus on entrepreneurial development than now. Why?

Transcript of Realize the Dream

  • Realize the Dream This article is a re-printed from theFebruary 2011 edition, as approved by theUP Business TodayBy

    Dar Sheperd

    In the history of the UnitedStates, there has never beena greater focus on entrepre-neurial development thannow. Why? Because theeconomy continues to sufferand we are undergoing afundamental shift in howbusiness is performed hereat home and around theworld. How does an aspir-ing entrepreneur positionthemselves to succeed whenthe majority of small busi-nesses fail?

    In a recent article publishedby Alyson Shontell for En-trepreneur magazine, theanswers as to why busi-nesses succeed and fail weredocumented. Paul Gomp-ers, Anna Kovner, JoshLerner and David Scharf-stein set out to find whysome entrepreneurs aremore successful than others.They put together a HarvardBusiness School workingpaper entitled,PerformancePersistence in Entrepre-neurship.

    Here is a summary of theirfindings:

    1. Do serial entrepreneurssucceed more than firsttime entrepreneurs?Answer: Yes. According tothe Harvard researchers,there is performance persis-tence in entrepreneurship.The authors noted, "All else(being) equal, a venture-capital-backed entrepreneurwho succeeds in a venturehas a 30 percent chance ofsucceeding in his next ven-ture."

    2. Who is more likely toget funded by a VC firm, anew entrepreneur or atried and true one?Answer: A new entrepre-neur.

    3. Is entrepreneurial suc-cess a skill, or is it luck?Answer: Starting a com-pany at the right time in theright industry is a skill.

    4. Does success breed suc-cess?Answer: Yes. Entrepre-neurs with previous suc-cesses can mobilize moreresources based on theirpast success.

    5. Are companies that arefunded by VC firms morelikely to succeed?Answer: Yes. VCs are bet-

    ter at identifying potentialsuccess and they bringgreater value to the start-up.

    6. If a company's founderhas been successful before,how important is the VC?Answer: If a startup isfounded by previously suc-cessful entrepreneurs, thenthe VC firm doesn't reallymatter.

    7. Where do most entre-preneurs get their ideasfrom?Answer: From former em-ployers.

    8. Will VCs give the sameentrepreneur funding ontheir next venture?Answer: Not usually. You'dthink successful entrepre-neurs would have no prob-lem getting funding fromventure capital firms thatpreviously backedthem...but you'd be wrong.

    9. Who closes VC fundingquicker, serial entrepre-neurs or newbies?Answer: Serial entrepre-neurs receive venture capi-tal sooner than first-timeentrepreneurs.

    10. Who receives a higherinitial valuation, seasonedentrepreneurs or newones?Answer: New entrepre-neurs.

    Real Odds: Only 3,000patents out of 1.5 millionare commercially viable, ac-cording to Richard Mauls-by, Director of PublicAffairs for the U.S. Patent& Trademark Office.

    Trade Secret: Many aspir-ing entrepreneurs believethere is abundant govern-ment money available tostart a new business venture.This belief is simply nottrue. We suggest you doyour homework and beginworking with experiencedprofessionals who haveachieved entrepreneurialsuccess themselves.

    Dar Shepherd is ProjectCoordinator for the e-Loft(www.theeloft.com), thebusiness information hubfor aspiring entrepreneurs.The e-Loft provides con-sulting and coaching ser-vices, educationalprograms, and venturecapital.