The Boston Globe reports on a new paper by Paul Gompers of Harvard Business School and his co-authors. The paper focuses on entpreneurship. Gompers finds that enterpreneurs who have started a company and launched an IPO have a higher success rate for their second venture than the usual success rate for first-time entrepeneurs. Here's what Gompers and his co-authors write:
"We show that entrepreneurs with a track record of success are much more likely to succeed than first-time entrepreneurs and those who have previously failed. In particular, they exhibit persistence in selecting the right industry and time to start new ventures. Entrepreneurs with demonstrated market timing skill are also more likely to outperform industry peers in their subsequent ventures."
Globe writer Scott Kirsner also points out his favorite finding from the paper, which is intriguing and makes it worth reading the paper to explore further:
"For instance, one of my favorite conclusions that Gompers compellingly makes is that venture capitalists do not add value to the companies they invest in. How does he know this? Not surprisingly, the top-tier VC firms are better at picking unknown "star entrepreneurs," but once they've been successful in their first ventures (i.e. their "star" qualities are now public information) then the success of subsequent ventures is unaffected by whether the venture backer is a top-tier firm or a bottom-tier one. Ouch!"
To read the entire working paper by Gompers and his colleagues, click here.