Liam Cheung: 7 days ago - 3 Min read

Performance Persistence in Entrepreneurship

At Tactico we are fans of academic papers and invest a great deal of time trying to understand the world we invest in objectively. In a world where opinion tends to dominate fact in “news” and where “information” is all to commonly part of a click bait scheme with its own agenda, we find select academic research to be an oasis of original ideas and facts.

In this posting, we want to share an interesting paper that we have been discussing that investigates two questions, 1) are entrepreneurs that succeed once more likely than most to succeed a second time? 2) If yes, what are the factors that determine that success? This is one of the papers suggested to us by our friend Jiro Kondo at McGill when we were discussing the factors of VC success.

Some take aways from this paper that interested us was the importance of timing and entrepreneurial success at timing ventures. This confirms other research that singles out timing as the factor with the highest weighting when looking at firm success. Also the paper points to evidence that serial entrepreneurs are better at predicting market timing of ventures.

Some disappointing features of the state of VC research exemplified in this paper is that there is very little data to identify VC backed firm success and the data used in the paper spans the period from 1980-2000. Public offerings at this point seems as outdated as a criteria for success as the data period used in this paper. We would be very interested in seeing the results of this research repeated on a more recent dataset, with perhaps a Series C or greater as a success criteria.”