Entrepreneurship

Entrepreneurship is a featured research topic and an initiative at Harvard Business School

Our long tradition of research in Entrepreneurship goes back to the 1930's and 1940's with the “the father of venture capitalism,” General Georges Doriot, and Joseph Schumpeter’s theory of innovation as a process of “creative destruction.” Building on our intellectual roots, our scholars come from disciplines including economics, finance, sociology, strategy, business history, management, and social entrepreneurship. A number of our faculty come from practice as venture capitalists and start-up founders. We focus our research on the identification and pursuit of entrepreneurial opportunities; domestic and international funding of entrepreneurial endeavors; innovation, particularly technological innovation in international ventures; the environments in which entrepreneurs make decisions; and social entrepreneurship. As our research contributes new insights, we are advancing the world’s understanding of complex entrepreneurial issues and helping to increase the entrepreneurial success of our students and practitioners worldwide.

Featured Works

Article | Journal of Economic Perspectives
Entrepreneurship as Experimentation
William R. Kerr, Ramana Nanda and Matthew Rhodes-Kropf
Entrepreneurship research is on the rise, but many questions about its fundamental nature still exist. We argue that entrepreneurship is about experimentation: the probabilities of success are low, extremely skewed, and unknowable until an investment is made. At a macro level, experimentation by new firms underlies the Schumpeterian notion of creative destruction. However, at a micro level, investment and continuation decisions are not always made in a competitive Darwinian contest. Instead, a few investors make decisions that are impacted by incentive, agency, and coordination problems, often before a new idea even has a chance to compete in a market. We contend that costs and constraints on the ability to experiment alter the type of organizational form surrounding innovation and influence when innovation is more likely to occur. These factors not only govern how much experimentation is undertaken in the economy, but also the trajectory of experimentation, with potentially very deep economic consequences.
Keywords: Entrepreneurship; Innovation and Invention;

Citation:
Kerr, William R., Ramana Nanda, and Matthew Rhodes-Kropf. "Entrepreneurship as Experimentation." Journal of Economic Perspectives 28, no. 3 (Summer 2014): 25–48. View Details
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Case | HBS Case Collection | January 2014 (Revised October 2014)
Andreessen Horowitz
Thomas R. Eisenmann and Liz Kind
Andreessen Horowitz (a16z), a venture capital firm launched in 2009, has quickly broken into the VC industry's top ranks, in terms of its ability to invest in Silicon Valley's most promising startups. The case recounts the firm's history; describes its co-founders' motivations and their strategy for disrupting an industry in the midst of dramatic structural change; and asks whether a16z's success to date has been due to its novel organization structure. a16z's 22 investment professionals are supported by 43 recruiting and marketing specialists—an "operating team" that is an order of magnitude larger than that of any other VC firm. Furthermore, the operating team aims to not only assist a16z portfolio companies, but also to be broadly helpful to all parties in the Silicon Valley ecosystem, including search firms, journalists, PR agencies, and Fortune 500 executives. The bet: by providing "no-strings-attached" help to ecosystem partners, the partners might someday reciprocate by steering founders seeking funding to a16z. The case closes by asking whether a16z should seek to double its scale over the next years.
Keywords: Business Model; Venture Capital; Disruption; Entrepreneurship; Industry Structures; Financial Services Industry; California;

Citation:
Eisenmann, Thomas R., and Liz Kind. "Andreessen Horowitz." Harvard Business School Case 814-060, January 2014. (Revised October 2014.) (request a courtesy copy.) View Details
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Background Note | HBS Case Collection | February 2014
Raising Startup Capital
Jeffrey Bussgang
Entrepreneurs typically focus their full energies on business-building. But raising capital is a core part of building a valuable business. Developing expertise in raising capital is more than a necessary evil, it is a competitive weapon. Master it and you will be in a better position to make your company a massive success. But how do you finance a new venture? In this note, I will try to help answer this question by addressing the following topics:
• Types of funding. The two major types of startup capital are equity funding and debt funding although there are a few hybrid flavors as well.
• Sources of funding. These include venture capital firms, angel investors, crowd-funding, and accelerators/incubators.
• What investors look for. Each source has a different funding process and set of criteria which you need to understand before seeking funding from that source.
• The mechanics of equity funding. Seeking and securing funding involves setting amounts, agreeing to terms, and defining relationships.
Keywords: fund raising; venture capital; venture capital term sheet; venture creation/development; venture investing; venture philanthropy; entrepreneurial finance; entrepreneurial management; entrepreneurs; entrepreneurship; Jumpstart Our Business Startups (JOBS) Act; Non-equity financing; Convertible notes; convertible debt; debt financing; Raising Capital; National Venture Capital Association; venture capital firm compensation; crowdfunding; crowd-funding; Startup; start-up; startup management; Startups; angel investors; angels; accelerator; Venture Capital; Financing and Loans; Entrepreneurship; Business Startups; Financial Services Industry; United States;

Citation:
Bussgang, Jeffrey. "Raising Startup Capital." Harvard Business School Background Note 814-089, February 2014. View Details
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Article | Review of Financial Studies | January 2014
The Consequences of Entrepreneurial Finance: Evidence from Angel Financings
William R. Kerr, Josh Lerner and Antoinette Schoar
This paper documents that ventures that are funded by two successful angel groups experience superior outcomes to rejected ventures: they have improved survival, exits, employment, patenting, web traffic, and financing. We use strong discontinuities in angel funding behavior over small changes in their collective interest levels to implement a regression discontinuity approach. We confirm the positive effects for venture operations, with qualitative support for a higher likelihood of successful exits. On the other hand, there is no difference in access to additional financing around the discontinuity. This might suggest that financing is not a central input of angel groups.
Keywords: Business Ventures; Financing and Loans; Interests; Employment; Patents; Web; Operations; Entrepreneurship; Business Exit or Shutdown;

Citation:
Kerr, William R., Josh Lerner, and Antoinette Schoar. "The Consequences of Entrepreneurial Finance: Evidence from Angel Financings." Review of Financial Studies 27, no. 1 (January 2014): 20–55. View Details
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Case | HBS Case Collection | September 2014 (Revised December 2014)
The Ullens Center for Contemporary Art
Mukti Khaire and Nancy Hua Dai
Since its opening in Beijing in November 2007 as the first non-profit art center in China, UCCA had been operating with the mission to "promote the continued development of the Chinese art scene, foster international exchange, and showcase the latest in art and culture to hundreds of thousands of visitors each year." For the past six years, UCCA had worked with more than 100 artists and designers to present 87 art exhibitions and 1,826 public programs to over 1.8 million visitors, including many important leaders from all over the world. Given the context of the economic and political environment in the rapidly changing Chinese art market, the founders and senior management of UCCA wondered what they could do to achieve growth and financial viability while continuing to realize their mission.
Keywords: art world; art gallery; art market; Arts; Nonprofit Organizations; Entrepreneurship; China;

Citation:
Khaire, Mukti, and Nancy Hua Dai. "The Ullens Center for Contemporary Art." Harvard Business School Case 815-022, September 2014. (Revised December 2014.) View Details
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Discussion Paper | 2014
The Promise of Microfinance and Women's Empowerment: What Does the Evidence Say?
Dina D. Pomeranz
The microfinance revolution has transformed access to financial services for low-income populations worldwide. As a result, it has become one of the most talked-about innovations in global development in recent decades. However, its expansion has not been without controversy. While many hailed it as a way to end world poverty and promote female empowerment, others condemned it as a disaster for the poor. Female empowerment has often been seen as one of the key promises of the industry. In part, this is based on the fact that more than 80% of its poorest clients, i.e., those who live on less than $1.25/day, are women. This paper discusses what we have learned so far about the potential and limits of microfinance and how insights from research and practice can help inform the industry's current products, policies and future developments.
Keywords: Microfinance; Entrepreneurship in emerging markets; entrepreneurship; gender; Women's Empowerment; entrepreneurs; Saving; savings; credit; credit supply; Insurance; Development economics; development finance; Behavioral economics; Gender; Microfinance; Social Entrepreneurship; Developing Countries and Economies; Banking Industry; Public Administration Industry; Financial Services Industry; Insurance Industry; Latin America; Kenya; Chile; India; Asia; Africa;

Citation:
Pomeranz, Dina D. "The Promise of Microfinance and Women's Empowerment: What Does the Evidence Say?" EY Thought Leadership Series, February 2014. View Details
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Recent Publications

Case | HBS Case Collection | November 2018
Michael Rubin and Fanatics (A)
Robert F. Higgins and John Masko
In 2016, Michael Rubin’s Fanatics was the U.S.’ largest sports e-commerce company, and operator of the official online store for all the major American sports leagues. That year, Fanatics began to dabble in manufacturing licensed sports merchandise, securing limited permissions from leagues to manufacture apparel in response to ‘micro-moments,’ sudden surges of interest in a team or player that were too abrupt for the league’s usual licensees to react to. The success of these efforts raised the possibility that Fanatics might make a play to displace a major athletic wear manufacturer as the official merchandise licensee of a major sports league. For a company with little manufacturing infrastructure and experience however, it was unclear whether this was an advisable step for Fanatics, or how they would go about it.
Keywords: Fanatics; licensed merchandise; e-commerce; Entrepreneurship; Strategy; Organizational Change and Adaptation; Sports; Apparel and Accessories Industry; Retail Industry; Manufacturing Industry; United States;

Citation:
Higgins, Robert F., and John Masko. "Michael Rubin and Fanatics (A)." Harvard Business School Case 819-077, November 2018. View Details
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Case | HBS Case Collection | November 2018
Yatooq: Longing for Arabic Coffee
Mark Roberge, Gamze Yucaoglu and Samer Al-Rachedy
As one of the few female entrepreneurs in Saudi Arabia, Lateefa Alwaalan had been trying to produce the perfect cup of Arabic coffee for over a decade. In 2007, she began testing various coffee blends, which she later branded Yatooq, the Arabic word for “craving” or “longing”. She soon realized that the brewing process was just as important as the blend in consistently producing a great cup of Arabic coffee. Therefore, she developed the world’s first Arabic coffee machine in 2013 to complement her blend.
Sales of the Yatooq coffee machines grew rapidly in Saudi Arabia, exceeding $2 million in sales in 2014. However, an increase in competition combined with an economic slowdown in the country led to declining sales and increasing costs for Yatooq. Alwaalan reflected on the decisions she made to date, wondering if the revenue decline could have been avoided. She also contemplated the path forward, specifically whether she should iterate on her go-to-market strategy with her existing product or pivot to an entirely different product.
Keywords: entrepreneurial sales; entrepreneurial selling; entrepreneurial marketing; barrier to entry; Business Start-ups; Yatooq; Entrepreneurship; Private Sector; For-Profit Firms; Business Strategy; Patents; Business Startups; Strategic Planning; Competitive Strategy; Adaptation; Corporate Entrepreneurship; Corporate Strategy; Food and Beverage Industry; Saudi Arabia; Asia;

Citation:
Roberge, Mark, Gamze Yucaoglu, and Samer Al-Rachedy. "Yatooq: Longing for Arabic Coffee." Harvard Business School Case 819-075, November 2018. View Details
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Case | HBS Case Collection | October 2018
Zenefits Board of Directors (A)
Lynn S. Paine and Will Hurwitz
In early 2018, the time seemed right for Zenefits investor and director Lars Dalgaard to reflect on whether Zenefits had the right board of directors to shepherd the company through its next stages of growth. For the company whose name combined the words “benefits,” reflecting its human resources technology products, and “zen,” loosely defined as a state of calm, the past few years were not entirely zen. Once heralded as one of the fastest growing software start-ups ever, the 5-year old company quickly achieved “unicorn” status—a term given to an elite handful of privately-held start-ups valued at $1 billion or more. But leadership and legal issues that emerged in 2015 had threatened to undermine its success and compelled Zenefits to appoint new board members, hire new executives, reformulate its business model, and transform its corporate culture and philosophy. With those changes in place, Dalgaard now turned his attention once again to the board. Did Zenefits have the board it needed to navigate the next stages of growth as it sought to further distance itself from its rocky past and focus on its future potential?
Keywords: Ethics; Business Model; Corporate Accountability; Governing and Advisory Boards; Corporate Governance; Crisis Management; Entrepreneurship; Human Resources; Leadership; Risk Management; Venture Capital; Technology Industry; Telecommunications Industry; Information Technology Industry; United States; California;

Citation:
Paine, Lynn S., and Will Hurwitz. "Zenefits Board of Directors (A)." Harvard Business School Case 319-034, October 2018. View Details
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Case | HBS Case Collection | October 2018
Safecast: Bootstrapping Human Capital to Big Data
Ethan Bernstein and Stephanie Marton
On March 11, 2011 at 2:46pm, a 9.1-on-the-Richter-scale, six-minute long earthquake unleashed a tsunami that ravaged the Tohoku region of Japan, damaging the Fukushima Daiichi Nuclear Power facility and releasing sufficient radioactive material into the air and ocean to make it one of only two “level 7” nuclear disasters in history (second only to Chernobyl).
But just how much radioactive material had escaped was not clear. A tense time was made worse by sporadic disclosures of fragmented information. Those who had power or cell service, mostly friends and family outside the region, were glued to their television and smartphone screens, but, by definition, no one could see the radiation they feared.
Frustrated by their own desires to know what should have been knowable, three technologists—Sean Bonner, Pieter Franken and Joi Ito—founded non-profit Safecast around a volunteer-centered, open, citizen-science, “crowdmapping” model to monitor radiation levels. With the help of thousands of volunteers, by 2018, Safecast had become not just the “go to” source of information on radiation issues in Japan and elsewhere, but also the vanguard example of citizen science.
Yet as Safecast’s dataset strengthened exponentially, the sustainability of its financial model weakened. The same open, crowd-based model that made the founder’s data collection sustainable was still financially unsustainable. Was there a business model that could sustain the organization financially without undermining their volunteer-based operations, and if so, what would it look like?
Keywords: citizen science; creative commons; Open Data; open architecture; volunteer-based organization; human capital; Fukushima Daiichi Nuclear Power Facility; 311; nuclear; radiation; crowdsourcing; bgeigie; geiger counters; kickstarter; sustainability; sustainable business and innovation; Design; Energy Generation; Social Entrepreneurship; Human Capital; Innovation and Invention; Crisis Management; Organizational Structure; Organizational Design; Technology; Business Model; Energy Industry; Technology Industry; Japan; North and Central America; Europe;

Citation:
Bernstein, Ethan, and Stephanie Marton. "Safecast: Bootstrapping Human Capital to Big Data." Harvard Business School Case 419-033, October 2018. View Details
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Case | HBS Case Collection | October 2018
Khan Academy 2018
William A. Sahlman and Nicole Tempest
Online global education nonprofit tries to balance far-reaching long term aspirational vision with short term need for greater focus and prioritization
Keywords: entrepreneur; sustainability; scaling; Social Entrepreneurship; Nonprofit Organizations; Strategy; Education; Entrepreneurship; Teaching; Education Industry; California;

Citation:
Sahlman, William A., and Nicole Tempest. "Khan Academy 2018." Harvard Business School Case 819-064, October 2018. View Details
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Case | HBS Case Collection | October 2018
Phuc Huynh and Teach for Vietnam (A)
Leslie Perlow and Eunice Eun
This Harvard Business School case is about Harvard Kennedy School graduate, Phuc Huynh, who wants to establish Teach for Vietnam (TFV) in his home country and become an official Teach for All partner. It considers the concepts of giving back in one’s career and the process of deciding whether to give up on a seemingly unattainable goal or whether to persevere and follow through on a dream, despite multiple obstacles.
Keywords: Vietnam; Asia; Giving Back; Career Decisions; Education; Social Entrepreneurship; Personal Development and Career; Mission and Purpose; Leadership Development; Education Industry; Viet Nam; Asia;

Citation:
Perlow, Leslie, and Eunice Eun. "Phuc Huynh and Teach for Vietnam (A)." Harvard Business School Case 419-036, October 2018. View Details
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Case | HBS Case Collection | October 2018
Masayoshi Son and the Vision Fund
Tom Nicholas, Ramana Nanda and Benjamin N. Roth
In October 2016 SoftBank Group Corp., the Japanese conglomerate giant caused a significant shock to the worldwide market for venture capital and private equity by announcing the Vision Fund, the largest tech investment fund in the world at close to $100 billion. The reputation of legendary SoftBank CEO Masayoshi Son depended on the success of the Vision Fund, a considerable challenge given the difficulties associated with organizing a large pool of capital, investing at scale and generating VC-style returns. By effectively anointing category leaders and deterring competitive entry, would the Vision Fund accelerate innovation or undermine the market forces that have typically produced social value by spurring rapid technological change?
Keywords: venture capital; private equity; entrepreneurship; strategy; Venture Capital; Private Equity; Entrepreneurship; Competitive Strategy;

Citation:
Nicholas, Tom, Ramana Nanda, and Benjamin N. Roth. "Masayoshi Son and the Vision Fund." Harvard Business School Case 819-041, October 2018. View Details
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Case | HBS Case Collection | October 2018
Arlan Hamilton and Backstage Capital
Laura Huang and Sarah Mehta
Frustrated by an inability to convince existing venture capital firms to invest in companies led by women, people of color, and LGBT founders, Arlan Hamilton started her own firm, Backstage Capital, in 2015. Hamilton understood the untapped potential of companies run by underrepresented founders, a group historically excluded from venture capital funding, and was eager to demonstrate the significant returns on investment in such companies. This case explores Hamilton’s nontraditional VC background, and her mission to fund startups where at least one founder of the company identifies as a woman, person of color, or LGBT. Now, three years after its founding, Hamilton is considering launching both an accelerator and a fund that will invest exclusively in Black women.
Keywords: venture capital; entrepreneurship; diversity; gender; race; black leadership; LGBTQ; women; people of color; Cultural Entrepreneurship; Mission and Purpose; Corporate Social Responsibility and Impact; Identity; Personal Characteristics; Prejudice and Bias; Social Issues; Diversity; Gender; Race;

Citation:
Huang, Laura, and Sarah Mehta. "Arlan Hamilton and Backstage Capital." Harvard Business School Case 419-029, October 2018. View Details
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Case | HBS Case Collection | October 2018
Testing Autonomy in Pittsburgh (A)
Mitchell Weiss and Brittany Urick
Pittsburgh’s mayor had been among the first to welcome self-driving vehicles, but was now one of many needing to react after a pedestrian fatality involving an autonomous Uber in Arizona. He had originally preferred to roll out “the red carpet” instead of the “red tape”. Now he found himself needing to balance technological advancement and the city’s economic trajectory against public health and safety concerns and, simply, citizens’ fears. Post-Arizona, should he allow AV firms to double down on experimentation? When it came to testing new technology, how safe was safe enough?
Keywords: public entrepreneurship; government innovation; government experimentation; autonomous vehicles; mayor; mayor peduto; cities; mobility; automation; Uber; argo ai; aurora innovation; aptiv; Entrepreneurship; Public Sector; Innovation and Invention; Transportation; City; Safety; Business and Government Relations; Transportation Industry; Auto Industry; United States; Pennsylvania; Pittsburgh;

Citation:
Weiss, Mitchell, and Brittany Urick. "Testing Autonomy in Pittsburgh (A)." Harvard Business School Case 819-059, October 2018. View Details
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Case | HBS Case Collection | October 2018
Shield AI
Mitchell Weiss and A.J. Steinlage
Shield AI’s quadcopter – with no pilot and no flight plan – could clear a building and outpace human warfighters by almost five minutes. This was not to say that it was better than the warfighters or would replace their jobs, but it was evidence that autonomous robots deployed in this fashion could keep up with the pace of operators, serve as a force multiplier, and help protect civilian and service member lives. But was it evidence that the Shield AI team should ask their newest potential customer for a contract 50-60 times more than their only two contracts to date? Would asking for what a system of coordinated, exploring robots really cost - $50 to $60 million - scare off their U.S. government customer? No one would blink if Lockheed Martin, Boeing, or other large defense companies proposed a $60 million effort to do the same, but would it make Shield AI, barely two years past founding, look arrogant, ignorant, or both?
Keywords: public entrepreneurship; artificial intelligence; AI; entrepreneurial sales; government; defense; Shield AI; Brandon Tseng; Ryan Tseng; Andrew Reiter; robots; robotics; UAV; UAVs; government sales; Entrepreneurship; Innovation and Invention; Sales; Government Administration; National Security; Business and Government Relations; Technology Industry; United States;

Citation:
Weiss, Mitchell, and A.J. Steinlage. "Shield AI." Harvard Business School Case 819-062, October 2018. View Details
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