Small Business Labs

The Anatomy of an Entrepreneur From the Kauffman Foundation

The Kauffman Foundation's The Anatomy of an Entrepreneur: Family Background and Motivation study covers the backgrounds, life histories, motivations and beliefs of company founders based on a survey of mostly high tech entrepreneurs. 

Findings include:

- Company founders tend to be middle-aged and well educated and 95% of their survey respondents had completed college and 47% held advanced degrees. 

- Building wealth (75%), capitalizing on a business idea (64%) and owning a business (64%) were the top reasons given for starting a business.

- Most had significant industry experience prior to starting their business.  Also, 70% were married and 60% had at least one child when they started their business.  The average respondent was middle-aged when they started their business. 

It is an excellent piece of the work and survey results provide interesting insights into the lives and motivations of high tech, high growth entrepreneurs.

It is important to note that 77% survey respondents are founders of high tech companies.  And although there isn't much company data, it is likely most of the respondents started high growth employer businesses with significant invested capital.  Because of this, the survey results do not apply to the founders of typical small businesses.   

The key data source listed in the report is OneSource Information Services.   Coincidentally, based on the definitions used in the report I am one of the founders of OneSource.  My marketing team came up with the company name.  It is fun to see they are still around and still using the OneSource name.   

Kaufman Foundation on Start-Up Business Accelerators

The Kaufman Foundation has released a report entitled "Finding New "Idols": A New Model to Accelerate Start-ups."  The report is on the growth of start-up business accelerators.  These are a new form of start-up incubators which, the report says, are not "your father's incubators" but much more.  Key quote from the report:

"An accelerator is much more; it is a full partnership. The accelerator typically provides much more than space and common management services to start-ups. It helps form companies as legal entities, interviews and hires the appropriate initial management team, and lends its own management expertise.

In short, the accelerator becomes the “new company” throughout seed-stage development. Whereas a seed-stage venture firm will assist in building the company on an as-needed basis, and otherwise provide guidance, the accelerator is “the company” from day one of its formation. The accelerator team is the new company’s team and assists in both business and product development."

The authors believe this new funding and support model will become widespread.  In their press release they say "our impression is the floodgate has opened and more accelerators will be created nationally and internationally."

As the report points out, for a variety of reasons traditional VC firms have become less focused on early stage and seed investing.   Business accelerators are a likely to help fill this funding and support gap for high performance start-ups.

GEM on China and India

One of the most interesting findings of the 2007 GEM report (see prior post describing GEM below) is the entrepreneurial differences between China and India.  According to the GEM report:

"The world’s two largest emerging economies, China and India, exhibit significantly different levels of high-expectation and high-growth entrepreneurship.  The difference between China and Indiais over sixfold."

You have to actually dig a bit to see what they mean by this, but if you do you will find that the percentage of high-expectation and high-growth entrepreneurs is 6X higher in China than India (see prior post on GEM or the GEM Report for definitions).  If these differences sustain themselves over time, the two countries will have a very different economic structures and impact the rest of the world in very different ways.

The Global Entrepreneurship Monitor 2007 Report

The Global Entrepreneurship Monitor (GEM) has released their 2007 report which is well worth reading.  According to their website, GEM is:

The Global Entrepreneurship Monitor (GEM) research program is an annual assessment of the national level of entrepreneurial activity. Initiated in 1999 with 10 countries, expanded to 21 in the year 2000, with 29 countries in 2001 and 37 countries in 2002. GEM 2007 will conduct research in 50 countries.

The research program, based on a harmonized assessment of the level of national entrepreneurial activity for all participating countries, involves exploration of the role of entrepreneurship in national economic growth.

GEM is focused on high expectation entrepreneurs, which GEM defines as entrepreneurs with plans to have more than 20 employees within 5 years of founding their business - and high growth entrepreneuers, which GEM defines as established entrepreneurs with more than 20 employees.  They focus on these segments because of their broad ecomomic and employment impact.