In a recent paper, Performance Persistence in Entrepreneurship, Paul Gompers, Anna Kovner, Josh Lerner and David Scharfstein reveal some of the secrets of entrepreneurial success.
Here are the main findings:
- Serial entrepreneurs are more likely to be successful in their next startup. A venture-capital-backed successful entrepreneur has a 30% chance of succeeding in his next venture. Entrepreneurs who failed before have a 20% chance, while first-time entrepreneurs have only an 18% chance of succeeding.
- An entrepreneur who has previously received VC funding and has failed in his venture is more likely to get more funding in the future from the same VC firm, while those who succeed will be less likely to receive new funds from the same VC firm.
- Market timing ability is an attribute of successful entrepreneurs.
- Most entrepreneurs get their ideas from former employers. "A substantial fraction of the Inc. 500 got their idea for their new company while working at their prior employer."
- Serial entrepreneurs are able to get funding faster than first-time entrepreneurs.
- First-time entrepreneurs receive an higher initial valuation.