I have recently been wondering what my expected earnings would be if I started another company. I looked back at the old 80 K blog post arguing that there is some skill component to entrepreneurship, and noticed that, while serial entrepreneurs do have a significantly higher chance of a successful exit on their second venture, they raise their first rounds at substantially lower valuations. (Table 4 here.)
It feels so obvious to me that someone who’s started a successful company in the past will be more likely to start one in the future, and I continue to be baffled why the data don’t show this.[1]
I have heard some VCs say that they don’t fund serial entrepreneurs because humans only have enough energy to start one company; I always thought this was kind of dumb, but maybe there is some truth to it.
Although the data don’t not show this either. Companies founded by second time entrepreneurs might be less ambitious, raise money earlier, or have some other difference which is consistent with second time entrepreneurs being more successful
Wild guesses as someone that knows very little about this:
I wonder if it’s because people have sublinear returns on wealth, so their second company would be more mission driven and less optimized for making money. Also, there might be some selection bias in who needs to raise money vs being self funded.
But if I had to bet I would say that it’s mostly noise, and there’s not enough data to have a strong prior.
I have recently been wondering what my expected earnings would be if I started another company. I looked back at the old 80 K blog post arguing that there is some skill component to entrepreneurship, and noticed that, while serial entrepreneurs do have a significantly higher chance of a successful exit on their second venture, they raise their first rounds at substantially lower valuations. (Table 4 here.)
It feels so obvious to me that someone who’s started a successful company in the past will be more likely to start one in the future, and I continue to be baffled why the data don’t show this.[1]
I have heard some VCs say that they don’t fund serial entrepreneurs because humans only have enough energy to start one company; I always thought this was kind of dumb, but maybe there is some truth to it.
Although the data don’t not show this either. Companies founded by second time entrepreneurs might be less ambitious, raise money earlier, or have some other difference which is consistent with second time entrepreneurs being more successful
Wild guesses as someone that knows very little about this:
I wonder if it’s because people have sublinear returns on wealth, so their second company would be more mission driven and less optimized for making money. Also, there might be some selection bias in who needs to raise money vs being self funded.
But if I had to bet I would say that it’s mostly noise, and there’s not enough data to have a strong prior.