Skill vs. Luck in Entrepreneurship and Venture Capital: Evidence from Serial Entrepreneurs
AbstractThis paper argues that a large component of success in entrepreneurship and venture capital can be attributed to skill. We show that entrepreneurs with a track record of success are more likely to succeed than first time entrepreneurs and those who have previously failed. Funding by more experienced venture capital firms enhances the chance of success, but only for entrepreneurs without a successful track record. Similarly, more experienced venture capitalists are able to identify and invest in first time entrepreneurs who are more likely to become serial entrepreneurs. Investments by venture capitalists in successful serial entrepreneurs generate higher returns for their venture capital investors. This finding provides further support for the role of skill in both entrepreneurship and venture capital.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12592.
Date of creation: Oct 2006
Date of revision:
Publication status: published as Gompers, Paul, Anna Kovner, Josh Lerner, and David Scharfstein. “Performance Persistence in Entrepreneurship." Journal of Financial Economics 96 (2010): 18-32. Earlier version distributed as National Bureau of Economic Research Working Paper No. 12592 and Harvard Business School Working Paper No. 09-028. (Earlier Name: “Skill vs. Luck in Entrepreneurship and Venture Capital: Evidence from Serial Entrepreneurs.”)
Contact details of provider:
Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
Web page: http://www.nber.org
More information through EDIRC
Find related papers by JEL classification:
- G24 - Financial Economics - - Financial Institutions and Services - - - Investment Banking; Venture Capital; Brokerage
- L26 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Entrepreneurship
This paper has been announced in the following NEP Reports:
- NEP-ALL-2006-11-04 (All new papers)
- NEP-BEC-2006-11-04 (Business Economics)
- NEP-ENT-2006-11-04 (Entrepreneurship)
- NEP-INO-2006-11-04 (Innovation)
- NEP-TID-2006-11-04 (Technology & Industrial Dynamics)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- David H. Hsu, 2004. "What Do Entrepreneurs Pay for Venture Capital Affiliation?," Journal of Finance, American Finance Association, American Finance Association, vol. 59(4), pages 1805-1844, 08.
- Paul Gompers & Anna Kovner & Josh Lerner, 2007.
"Specialization and Success: Evidence from Venture Capital,"
in: Entrepreneurship: Strategy and Structure
National Bureau of Economic Research, Inc.
- Paul Gompers & Anna Kovner & Josh Lerner, 2009. "Specialization and Success: Evidence from Venture Capital," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 817-844, 09.
- Steven Kaplan & Antoinette Schoar, 2003. "Private Equity Performance: Returns, Persistence and Capital," NBER Working Papers 9807, National Bureau of Economic Research, Inc.
- Carroll, Glenn R. & Mosakowski, Elaine M., 1987. "The Career Dynamics of Self-Employment," Institute for Research on Labor and Employment, Working Paper Series, Institute of Industrial Relations, UC Berkeley qt13p1n10b, Institute of Industrial Relations, UC Berkeley.
- Kihlstrom, Richard E & Laffont, Jean-Jacques, 1979. "A General Equilibrium Entrepreneurial Theory of Firm Formation Based on Risk Aversion," Journal of Political Economy, University of Chicago Press, University of Chicago Press, vol. 87(4), pages 719-48, August.
- Paul Gompers & Josh Lerner, 2006. "The Venture Capital Cycle, 2nd Edition," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262572389, December.
- Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
- Das, Sanjiv R. & Jo, Hoje & Kim, Yongtae, 2011. "Polishing diamonds in the rough: The sources of syndicated venture performance," Journal of Financial Intermediation, Elsevier, Elsevier, vol. 20(2), pages 199-230, April.
- Michael D. McKenzie & William H. Janeway, 2011. "Venture capital funds and the public equity market," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 51(3), pages 764-786, 09.
- Jing Chen, 2009. "Selection and Serial Entrepreneurs," Working Papers 0913, Florida International University, Department of Economics.
- Steven N. Kaplan & Mark M. Klebanov & Morten Sorensen, 2008. "Which CEO Characteristics and Abilities Matter?," NBER Working Papers 14195, National Bureau of Economic Research, Inc.
- Marco Vivarelli, 2012. "Entrepreneurship and Post-Entry Performance: the Microeconomic Evidence," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1286, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
- Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press, vol. 22(6), pages 1453-1495, December.
- Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), University of Nice Sophia Antipolis.
- Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
- Pontus Braunerhjelm & Simon Parker, 2010.
"Josh Lerner: recipient of the 2010 Global Award for Entrepreneurship Research,"
Small Business Economics,
Springer, vol. 35(3), pages 245-254, October.
- Braunerhjelm, Pontus & Parker, Simon, 2010. "Josh Lerner: Recipient of the 2010 Global Award for Entrepreneurship Research," Working Paper Series in Economics and Institutions of Innovation 233, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
- Vivarelli, Marco, 2012. "Entrepreneurship in Advanced and Developing Countries: A Microeconomic Perspective," IZA Discussion Papers 6513, Institute for the Study of Labor (IZA).
- Nobuyuki Hanaki & Alan Kirman & Matteo Marsili, 2009.
"Born Under a Lucky Star?,"
Tsukuba Economics Working Papers, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba
2009-003, Economics, Graduate School of Humanities and Social Sciences, University of Tsukuba.
- Zhang, Junfu, 2007.
"The Advantage of Experienced Start-Up Founders in Venture Capital Acquisition: Evidence from Serial Entrepreneurs,"
IZA Discussion Papers
2964, Institute for the Study of Labor (IZA).
- Junfu Zhang, 2011. "The advantage of experienced start-up founders in venture capital acquisition: evidence from serial entrepreneurs," Small Business Economics, Springer, vol. 36(2), pages 187-208, February.
- Toft-Kehler, Rasmus & Wennberg, Karl & Kim, Phillip H., 2014. "Practice makes perfect: Entrepreneurial-experience curves and venture performance," Journal of Business Venturing, Elsevier, vol. 29(4), pages 453-470.
- Dew, Nicholas & Read, Stuart & Sarasvathy, Saras D. & Wiltbank, Robert, 2009. "Effectual versus predictive logics in entrepreneurial decision-making: Differences between experts and novices," Journal of Business Venturing, Elsevier, vol. 24(4), pages 287-309, July.
- Quatraro, Francesco & Vivarelli, Marco, 2013. "Drivers of Entrepreneurship and Post-Entry Performance of Newborn Firms in Developing Countries," IZA Discussion Papers 7436, Institute for the Study of Labor (IZA).
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.