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  • 2006
  • Working Paper

Skill vs. Luck in Entrepreneurship and Venture Capital: Evidence from Serial Entrepreneurs

By: Paul A. Gompers, Anna Kovner, Josh Lerner and David S. Scharfstein
  • Format:Print
  • | Language:English
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Abstract

This paper argues that a large component of success in entrepreneurship and venture capital can be attributed to skill. We show that entrepreneurs with a track record of success are more likely to succeed than first time entrepreneurs and those who have previously failed. Funding by more experienced venture capitalfirms enhancesthe chance of success, but only for entrepreneurs without a successful track record. Similarly, more experienced venture capitalists are able to identify and invest in first time entrepreneurs who are more likely to become serial entrepreneurs. Investments by venture capitalists in successful serial entrepreneurs generate higher returns for their venture capital investors. This finding provides further support for the role of skill in both entrepreneurship and venture capital.

Keywords

Return On Investment; Entrepreneurship; Venture Capital; Success; Experience and Expertise

Citation

Gompers, Paul A., Anna Kovner, Josh Lerner, and David S. Scharfstein. "Skill vs. Luck in Entrepreneurship and Venture Capital: Evidence from Serial Entrepreneurs." NBER Working Paper Series, No. 12592, October 2006.
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About The Authors

Paul A. Gompers

Finance
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Josh Lerner

Entrepreneurial Management
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David S. Scharfstein

Finance
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More from the Authors

    • 2023
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    Learning by Investing: Entrepreneurial Spillovers from Venture Capital

    By: Josh Lerner, Jinlin Li and Tong Liu
    • November 2023
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    Zest AI: Machine Learning and Credit Access

    By: David S. Scharfstein and Ryan Gilland
    • October 2023
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    Entrepreneurial Exits

    By: Paul Gompers
More from the Authors
  • Learning by Investing: Entrepreneurial Spillovers from Venture Capital By: Josh Lerner, Jinlin Li and Tong Liu
  • Zest AI: Machine Learning and Credit Access By: David S. Scharfstein and Ryan Gilland
  • Entrepreneurial Exits By: Paul Gompers
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