Entrepreneurs in High Technology: Lessons from MIT and Beyond

By Edward B. Roberts | Go to book overview

marketing and financial plans being especially weak. Data support of many claims contained in the plans is inadequate in 80 percent of the plans, this feature showing up as critical in venture capital decision making. The research reveals a strong relation between overall objective assessment of the business plans and whether or not those firms receive early venture capital backing. This finding is also supported by the significant difference in appraisals of approved versus rejected plans by two venture capital organizations studied in depth.

Detailed examination of 44 technology-related investment decisions by two venture capital organizations reveals striking differences in their tastes and consequent investments, beyond both VCs preferring entrepreneurial groups to solo entrepreneurs. One VC firm puts its money into primarily product development efforts by two-year old firms, the other company participates in the further growth financing of companies nearly six years old on average. Although both investment companies proclaim as critical the personal characteristics of the people in whom they invest, only one VC displays investment behavior consistent with its claims, the other evidently principally affected by characteristics of the markets being served by the candidate firms. Both investors shun market situations in which customers appear importantly influenced by price, preferring cases in which the asserted technological advantages of the firms in which they invest might become dominant factors. With each venture capitalist the "funnel effect" is most evident, transforming 1,000 to 2,000 initial inquiries for funds into 100 to 200 that receive careful screening, and eventually into ten to twenty or so actual investments being made. In this selective environment technological entrepreneurs had better carefully map out their strategies for growth, the subject of the next part of this book.


References

J. D. Aram. "Attitudes and Behaviors of Informal Investors Toward Early-Stage Investments, Technology-Based Ventures, and Coinvestors", Journal of Business Venturing, 4, 5 ( 1989), 333-347.

A. V. Bruno & T. T. Tyebjee. "The One that Got Away: A Study of Ventures Rejected by Venture Capitalists", in J. A. Hornaday et al. (editors), Frontiers of Entrepreneurship Research, 1982 ( Wellesley, MA.: Babson College, 1982), 289-306.

A. V. Bruno & T. T. Tyebjee. "The Entrepreneur's Search for Capital", Journal of Business Venturing, 1 ( 1985), 61-74.

J. J. Chrisman. "Strategic, Administrative, and Operating Assistance: The Value of Outside Consulting to Pre-Venture Entrepreneurs", Journal of Business Venturing, 4, 6 ( 1989), 401-418.

B. Dean & J. J. Giglierano. "Patterns in Multi-Stage Financing in Silicon Valley", in Proceedings of Vancouver Conference ( Vancouver, BC: College on Innovation Management and Entrepreneurship, The Institute of Management Science, May 1989).

J. Freear & W. E. Wetzel Jr. "Equity Capital for Entrepreneurs", in Proceedings of VancouverConference

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Entrepreneurs in High Technology: Lessons from MIT and Beyond
Table of contents

Table of contents

  • Title Page iii
  • Preface vii
  • Acknowledgments ix
  • Contents xi
  • Chapter 1 High-Technology Entrepreneurs 3
  • References 30
  • Chapter 2 an Environment for Entrepreneurs 31
  • References 45
  • Chapter 3 the Makings of an Entrepreneur 47
  • Summary and Implications 94
  • Notes 96
  • References 97
  • Chapter 4 the Technological Base of the New Enterprise 100
  • Summary and Implications 121
  • References 123
  • Chapter 5 the Financial Base of the New Enterprise 124
  • Summary and Implications 156
  • Chapter 6 Evolving Toward Product and Market-Orientation 160
  • Notes 186
  • References 186
  • Chapter 7 Finding Additional Financing 188
  • References 215
  • Chapter 8 Going Public 217
  • Summary and Implications: Sizzle or Steak 242
  • References 244
  • Chapter 9 Survival Versus Success 245
  • Chapter 10 Product Strategy and Corporate Success 281
  • Notes 306
  • References 308
  • Chapter 11 Super-Success 309
  • Notes 336
  • References 338
  • Chapter 12 Technological Entrepreneurship: Birth, Growth, and Success 339
  • References 358
  • Appendix a Quarter Century of Research 359
  • References 375
  • Index of Founders and Firms 377
  • Subject Index 381
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