Capital →
- 03 May 2016
- Working Paper Summaries
Pay Now or Pay Later? The Economics within the Private Equity Partnership
Partnerships are essential to the professional service and investment sectors. Yet the partnership structure raises issues including intergenerational continuity. This study of more than 700 private equity partnerships finds 1) the allocation of fund economics is typically weighted toward the founders of the firms, 2) the distributions of carried interest and ownership substantially affect the stability of the partnership, and 3) partners’ departures have a negative effect on private equity groups’ ability to raise additional funds.
- 06 Apr 2016
- Research & Ideas
Should Entrepreneurs Pitch Products or Ideas for Products?
Entrepreneurs with a new product idea must decide whether to pitch the concept or provide an actual prototype. Which works best? Professor Hong Luo finds answers in Hollywood screenplays. Open for comment; 0 Comments.
- 21 Jan 2016
- Working Paper Summaries
The Globalization of Angel Investments: Evidence across Countries
Examining a cross-section of 13 angel groups who considered transactions across 21 countries, this study finds that angel investors have a positive impact on the growth of the firms they fund, their performance, and survival, while the selection of firms that apply for angel funding varies across countries.
- 07 Dec 2015
- Research & Ideas
The Rise of Personalized Entrepreneurial Finance and Other VC Trends
Thanks to tools such as Kickstarter, venture capital is becoming more democratized. Josh Lerner discusses crowd funding, investment trends, and other features of the changing funding landscape. Open for comment; 0 Comments.
- 21 Oct 2015
- Research & Ideas
How to Predict if a New Business Idea is Any Good
Professor Pian Shu tackles one of the most difficult questions in the startup world: How can you tell if a new business will succeed? Open for comment; 0 Comments.
- 02 Sep 2015
- Research & Ideas
Explaining China's Crash
After a decade of massive growth, China’s stock market began a precipitous summer slide that that hasn't slowed yet. Dante Roscini explains what's deflating markets worldwide. Open for comment; 0 Comments.
- 23 Jun 2014
- Research & Ideas
In Venture Capital, Birds of a Feather Lose Money Together
The more affinity there is between two VCs investing in a firm, the less likely the firm will succeed, according to research by Paul Gompers, Yuhai Xuan and Vladimir Mukharlyamov. Closed for comment; 0 Comments.
- 30 Apr 2014
- Research & Ideas
Venture Investors Prefer Funding Handsome Men
Studies by Alison Wood Brooks and colleagues reveal that investors prefer pitches from male entrepreneurs over those from female entrepreneurs, even when the content of the pitches is identical. And handsome men fare best of all. Open for comment; 0 Comments.
- 26 Aug 2013
- Lessons from the Classroom
Built for Global Competition from the Start
Building a startup as a global business requires managers with skills and strategy much different from their predecessors of even a generation ago, says William R. Kerr. Closed for comment; 0 Comments.
- 01 Jul 2013
- Research & Ideas
Crowdfunding a Poor Investment?
Crowdfunding promises to democratize funding of startups. But is that necessarily a good thing? Entrepreneurial finance experts Josh Lerner, Ramana Nanda, and Michael J. Roberts on the promises and problems with the newest method for funding small businesses. Closed for comment; 0 Comments.
- 11 Apr 2013
- Working Paper Summaries
Managers and Market Capitalism
In whose interests should managers act, particularly when structuring market regulations in highly technical or specialized matters that are largely outside public purview? This paper raises questions about the role of managers in sustaining the conditions for market capitalism to achieve its normative objectives. Rebecca Henderson and Karthik Ramanna begin with a discussion of the normative arguments for fully competitive markets as a resource allocation mechanism in complex societies. They suggest that Milton Friedman's assertion that the business of business is to increase its profits was in fact a moral assertion rooted in this normative framework. Next, they discuss the conditions for the existence of competitive markets and offer a brief overview of the institutions that provide them, noting that a combination of for-profit, pure public, and public-private institutions are needed to sustain capitalism. This perspective has two implications for managers. First, in many cases the opportunity to provide market completing institutions is a significant profit opportunity. Second, in those cases in which the provision of an institution is a scarcely attended political process or a public good that cannot be easily realized by managers, managers may have a duty to mitigate this market incompleteness even if it is not immediately profit maximizing to do so. Ultimately, managers' actions are likely to shape the moral and political legitimacy of market capitalism. Key concepts include: Managers may have a responsibility to structure market institutions so as to preserve the legitimacy of market capitalism, even if doing so is at the expense of corporate profits. Both conceptually and empirically, it is difficult to specify where legal self-serving lobbying ends and overt corruption of regulation begins. Even in those cases in which self-interested lobbying is clearly legal, it may not be consistent with the ethical objectives of capitalism. Distorting market rules, whether through legal lobbying or through overt corruption, distorts market outcomes and erodes political and social support for market capitalism. Finding a way to reconcile economic models of the role of the corporation and of business activity with the reality of events such as the financial crisis and the prevalence of "crony capitalism" and corporate corruption is one of the most important challenges of our time. Closed for comment; 0 Comments.
- 18 Feb 2013
- Research & Ideas
Breaking Through a Growth Stall
Many companies get stuck on a plateau, unable to grow and burning through cash at a frightening rate. Frank V. Cespedes discusses how focusing on the right customers can generate growth again. Closed for comment; 0 Comments.
- 19 Sep 2012
- Research & Ideas
Funding Innovation: Is Your Firm Doing it Wrong?
Many companies are at a loss about how to fund innovation successfully. In his new book, The Architecture of Innovation, Professor Josh Lerner starts with this advice: get the incentives right. Open for comment; 0 Comments.
- 04 Apr 2012
- Research & Ideas
When Founders Recruit Friends and Family as Investors
In his new book, The Founder's Dilemmas: Anticipating and Avoiding the Pitfalls That Can Sink a Startup, HBS Associate Professor Noam Wasserman tells readers how to anticipate, avoid, and, if necessary, recover from the landmines that can destroy a nascent company before it has the chance to thrive. In this excerpt, he discusses the pros and cons of recruiting friends and family members as investors. Open for comment; 0 Comments.
- 18 Oct 2010
- Lessons from the Classroom
Venture Capital’s Disconnect with Clean Tech
Clean-tech start-ups depend on patience and public policy to thrive—the Internet models for VC funding don't apply. That's why Harvard Business School professor Joseph Lassiter is making an unusual recommendation to his entrepreneurship students: Spend a few years serving time in a government job. Key concepts include: MBA students and young venture capitalists often assume that all promising start-ups can grow and exit as fast as Internet start-ups, but they're mistaken. Clean-tech start-ups are often stymied by a "valley of death"—that precarious stage between researching and developing a product and going to market. The success of clean-tech companies often is dependent on public policy, so it behooves budding VCs and entrepreneurs to spend a few years learning the ropes in a government or corporate job. Closed for comment; 0 Comments.
- 02 Feb 2009
- Research & Ideas
The Success of Persistent Entrepreneurs
Want to be a successful entrepreneur? Your best bet might be to partner with entrepreneurs who have a track record of success, suggests new research by Paul A. Gompers, Josh Lerner, David S. Scharfstein, and Anna Kovner. Key concepts include: Previously successful entrepreneurs are significantly more likely to lead successful new ventures than first-timers or those who previously failed. Successful entrepreneurs are adept at selecting the right industry and time to start new ventures. Suppliers and customers are more likely to back a person with previous successes. Closed for comment; 0 Comments.
- 03 Dec 2008
- Working Paper Summaries
Performance Persistence in Entrepreneurship
All else equal, a venture-capital-backed entrepreneur who starts a company that goes public has a 30 percent chance of succeeding in his or her next venture. First-time entrepreneurs, on the other hand, have only an 18 percent chance of succeeding, and entrepreneurs who previously failed have a 20 percent chance of succeeding. But why do these contrasts exist? Such performance persistence, as in the first example, is usually taken as evidence of skill. However, in the context of entrepreneurship, the belief that successful entrepreneurs are more skilled than unsuccessful ones can induce real performance persistence. In this way, success breeds success even if successful entrepreneurs were just lucky. Success breeds even more success if entrepreneurs have some skill. Key concepts include: There is evidence for the role of skill as well as the perception of skill in inducing performance persistence. Closed for comment; 0 Comments.
- 12 Mar 2007
- Research & Ideas
The New Real Estate
Real estate continues to defy revert-to-the-mean gravity to deliver handsome returns to investors. Professor Arthur I. Segel looks at the latest developments in the field and also considers several warning clouds that could darken the picture. Closed for comment; 0 Comments.
- 02 May 2005
- Research & Ideas
Four VCs on Evaluating Opportunities
Four venture capitalists explain to Harvard Business School professor Mike Roberts and senior research associate Lauren Barley how they evaluate potential investments. Closed for comment; 0 Comments.
These VC Partners May Make Your Firm Less Innovative
Startups that do business with VCs that also fund competitors may find they get the short end of the attention stick and produce fewer new products, concludes research by Rory McDonald and colleagues. Open for comment; 0 Comments.