I was recently turned onto an academic post on the the “Success of Persistent Entrepreneurs.” Two HBS professors have recently concluded that repeat entrepreneurs who have been successful in the past are substantially more likely to have success in their second venture than novice or previously failed entrepreneurs. This study centered around entrepreneurs whose first startup raised venture capital:
“Successful entrepreneurs in the study had a 34 percent chance of succeeding in their next venture-backed firm, compared with 23 percent for those who previously failed and 22 percent for first-timers.”
This is something that venture capital firms have been acting on since … well, since I know about! (Of course, I haven’t been doing this long enough to really know when it started, but I’m pretty sure VCs have always preferred to work with previously successful entrepreneurs.) Given a choice between two equally affable, competent seeming, well regarded founders with similar business plans, VC’s will pick the previously successful entrepreneur to back every time.
So what can you do if this is your first time as a startup founder and you are looking to raise venture capital funding? (Or I guess if you’ve failed at your first?) Attract a successful entrepreneur to your team! VCs LOVE LOVE LOVE getting involved with successful entrepreneurs’ projects, so go get yourself a successful entrepreneur! While it would be best if you can get them to join your management team - and by best I mean what the VC would like best, maybe not what you would like best - you can still get some of this successful entrepreneur pixie dust by having this person join your board or by having them as an active advisor to the business.
How do you meet a successful entrepreneur? Hopefully you can easily network to one in or around your particular industry. Conferences, industry networking groups or trade associations, or even lawyers can help you. Some of the young startup founders I’ve spent time with have literally cold called successful entrepreneurs and gotten them to become advisers of their startup. If your idea is good enough, and if you can explain it well enough, you should be able to attract the right people to your side.
I came across this HBS blog post from Darmesh Shah’s twitter feed (OnStartups) - I’d suggest you follow him, as he comes across some pretty interesting stuff.
