Entrepreneurial Spawning: Experience, Education, and the Role of Venture Capital

Abstract

We present theory and evidence on the careers of high-tech entrepreneurial founders prior to obtaining venture capital (VC), and after VC exit. Prior to obtaining VC, entrepreneurs may have started other ventures, worked as a salaried employee in a startup, or worked for a large company. Upon VC exit, the founding entrepreneur may become a salaried employee, start another firm (‘serial entrepreneur’), or become a business angel that invests in other entrepreneurs. Our detailed data resting on the CrunchBase online database indicate that VC exit systematically spawns serial entrepreneurs only in cases where the entrepreneur (1) had experience either in founding other startups or working for a startup prior to receiving VC, (2) had a ‘jack-of-all-trades’ education, or (3) achieved substantial financial success upon VC exit.

Keywords: entrepreneurship, entrepreneurial spawning, angel finance, venture capital, exit

JEL Classification: G24, J23, J24, L20, M13