Entrepreneurial Management

- May 2021
- Article
Preparing for a Pandemic: Accelerating Vaccine Availability

By: Amrita Ahuja, Susan Athey, Arthur Baker, Eric Budish, Juan Camilo Castillo, Rachel Glennerster, Scott Duke Kominers, Michael Kremer, Jean Lee, Canice Prendergast, Christopher M. Snyder, Alex Tabarrok, Brandon Joel Tan and Witold Wiecek

Vaccinating the world’s population quickly in a pandemic has enormous health and economic benefits. We analyze the problem faced by governments in determining the scale and structure of procurement for vaccines. We analyze alternative approaches to procurement, arguing that buyers should directly fund manufacturing capacity and shoulder most of the risk of failure, while maintaining some direct incentives for speed. We analyzed the optimal portfolio of vaccine investments for countries with different characteristics as well as the implications for international cooperation. Our analysis, considered in light of the experience of 2020, suggests lessons for future pandemics.
- May 2021
- Article
Preparing for a Pandemic: Accelerating Vaccine Availability

By: Amrita Ahuja, Susan Athey, Arthur Baker, Eric Budish, Juan Camilo Castillo, Rachel Glennerster, Scott Duke Kominers, Michael Kremer, Jean Lee, Canice Prendergast, Christopher M. Snyder, Alex Tabarrok, Brandon Joel Tan and Witold Wiecek

Vaccinating the world’s population quickly in a pandemic has enormous health and economic benefits. We analyze the problem faced by governments in determining the scale and structure of procurement for vaccines. We analyze alternative approaches to procurement, arguing that buyers should directly fund manufacturing capacity and shoulder most of...
- May 2021
- Article
Mutual Funds as Venture Capitalists? Evidence from Unicorns

By: Josh Lerner, Sergey Chernenko and Yao Zeng

The past decade saw the rise of both “founder-friendly” venture financings and non-traditional investors, frequently with liquidity constraints. Using detailed contract data, we study open-end mutual funds investing in private venture-backed firms. We posit an interaction between the classic agency problem between entrepreneurs and investors and the one between early-stage venture investors and liquidity-constrained later-stage ones. We find that mutual funds with more stable funding are more likely to invest in private firms, and that financing rounds with mutual fund participation have stronger redemption and IPO-related rights and less board representation, findings consistent with our conceptual framework.
- May 2021
- Article
Mutual Funds as Venture Capitalists? Evidence from Unicorns

By: Josh Lerner, Sergey Chernenko and Yao Zeng

The past decade saw the rise of both “founder-friendly” venture financings and non-traditional investors, frequently with liquidity constraints. Using detailed contract data, we study open-end mutual funds investing in private venture-backed firms. We posit an interaction between the classic agency problem between entrepreneurs and investors and...
- May–June 2021
- Article
Why Start-ups Fail

By: Thomas R. Eisenmann

If you’re launching a business, the odds are against you: Two-thirds of start-ups never show a positive return. Unnerved by that statistic, a professor of entrepreneurship at Harvard Business School set out to discover why. Based on interviews and surveys with hundreds of founders and investors and scores of accounts of entrepreneurial setbacks, his findings buck the conventional wisdom that the cause of start-up failure is either the founding team or the business idea. The author found six patterns that doomed ventures. Two were especially common: 1) Bad bedfellows. Other parties besides the founders—like employees, strategic partners, and investors—can play a major role in a firm’s demise. Quincy Apparel, for instance, was undone by weak support from its investors and factory partners and inflexible employees. 2) False starts. Many overlook a crucial step in the lean start-up process: researching customer needs before testing products. Like Triangulate, an online dating start-up, they keep rushing to launch fully functional offerings that don’t fit any market needs. The good news is, firms can avoid that pitfall by rigorously defining the problem they want to solve, getting one-on-one feedback from potential customers, and validating concepts with real customers in real-world settings.
- May–June 2021
- Article
Why Start-ups Fail

By: Thomas R. Eisenmann

If you’re launching a business, the odds are against you: Two-thirds of start-ups never show a positive return. Unnerved by that statistic, a professor of entrepreneurship at Harvard Business School set out to discover why. Based on interviews and surveys with hundreds of founders and investors and scores of accounts of entrepreneurial setbacks,...

About the Unit

The Entrepreneurial Management Unit strives to raise the level of academic work in the field of entrepreneurship, in methodological rigor, conceptual depth, and managerial applicability. We also strive to improve the odds of entrepreneurial success for our students and for practitioners worldwide.

Because it is such a complex phenomenon, entrepreneurship must be studied through multiple lenses. We use three.

The process of entrepreneurship - We seek to understand the processes of entrepreneurial activity in start-ups and established firms by examining the antecedents and consequences of various forms of entrepreneurial opportunity identification and opportunity pursuit for individuals, organizations, and industries. We see experimentation and innovation in products, services, processes, and business models as central to entrepreneurial activity.
The finance of entrepreneurship - We seek to understand the financing of entrepreneurial ventures by studying the antecedents and consequences of entrepreneurial funding decisions both domestically and internationally.
The context of entrepreneurship - We seek to understand the ways in which entrepreneurs both respond to and shape the context in which they operate, by examining the history of entrepreneurship across time and national borders and by analyzing the legal and cultural contexts for managerial action.

Please also visit the Arthur Rock Center for Entrepreneurship.

Recent Publications

Anomalie (B)

By: Jeffrey F. Rayport and Thomas O. Jones

May 2021 |
Supplement |
Faculty Research

Citation

Why Start-ups Fail

By: Thomas R. Eisenmann

May–June 2021 |
Article |
Harvard Business Review

If you’re launching a business, the odds are against you: Two-thirds of start-ups never show a positive return. Unnerved by that statistic, a professor of entrepreneurship at Harvard Business School set out to discover why. Based on interviews and surveys with hundreds of founders and investors and scores of accounts of entrepreneurial setbacks, his findings buck the conventional wisdom that the cause of start-up failure is either the founding team or the business idea. The author found six patterns that doomed ventures. Two were especially common: 1) Bad bedfellows. Other parties besides the founders—like employees, strategic partners, and investors—can play a major role in a firm’s demise. Quincy Apparel, for instance, was undone by weak support from its investors and factory partners and inflexible employees. 2) False starts. Many overlook a crucial step in the lean start-up process: researching customer needs before testing products. Like Triangulate, an online dating start-up, they keep rushing to launch fully functional offerings that don’t fit any market needs. The good news is, firms can avoid that pitfall by rigorously defining the problem they want to solve, getting one-on-one feedback from potential customers, and validating concepts with real customers in real-world settings.

Keywords: Entrepreneurship; Business Startups; Problems and Challenges; Failure

Citation

Find at Harvard

Preparing for a Pandemic: Accelerating Vaccine Availability

By: Amrita Ahuja, Susan Athey, Arthur Baker, Eric Budish, Juan Camilo Castillo, Rachel Glennerster, Scott Duke Kominers, Michael Kremer, Jean Lee, Canice Prendergast, Christopher M. Snyder, Alex Tabarrok, Brandon Joel Tan and Witold Wiecek

May 2021 |
Article |
AEA Papers and Proceedings

Vaccinating the world’s population quickly in a pandemic has enormous health and economic benefits. We analyze the problem faced by governments in determining the scale and structure of procurement for vaccines. We analyze alternative approaches to procurement, arguing that buyers should directly fund manufacturing capacity and shoulder most of the risk of failure, while maintaining some direct incentives for speed. We analyzed the optimal portfolio of vaccine investments for countries with different characteristics as well as the implications for international cooperation. Our analysis, considered in light of the experience of 2020, suggests lessons for future pandemics.

Keywords: Vaccines; Procurement; Health Pandemics; Health Care and Treatment; Acquisition; Cooperation

Citation

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Mutual Funds as Venture Capitalists? Evidence from Unicorns

By: Josh Lerner, Sergey Chernenko and Yao Zeng

May 2021 |
Article |
Review of Financial Studies

The past decade saw the rise of both “founder-friendly” venture financings and non-traditional investors, frequently with liquidity constraints. Using detailed contract data, we study open-end mutual funds investing in private venture-backed firms. We posit an interaction between the classic agency problem between entrepreneurs and investors and the one between early-stage venture investors and liquidity-constrained later-stage ones. We find that mutual funds with more stable funding are more likely to invest in private firms, and that financing rounds with mutual fund participation have stronger redemption and IPO-related rights and less board representation, findings consistent with our conceptual framework.

Keywords: Investment Funds; Investment; Business Startups; Venture Capital; Private Equity; Governance

Citation

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Public Entrepreneurial Finance around the Globe

By: Jessica Bai, Shai Bernstein, Abhishek Dev and Josh Lerner

2021 |
Working Paper |
Faculty Research

This paper examines how government funding programs geared towards early-stage companies interact with private capital markets. Using hand-collected data on 755 government programs worldwide, we find that governments’ allocations to such funding programs have been comparable to global venture capital disbursements in the past decade. Government programs were more frequent in periods with more private venture activity, a relationship that was stronger in nations with better public governance. The programs’ structures often relied on the local private sector. The private sector’s involvement was greater when government programs targeted earlier-stage companies and when rankings of government effectiveness were higher. We find that such government funding programs increased local innovation, particularly when the programs focused on early-stage ventures or collaborated with the private sector. These findings are most consistent with the explanation that the reliance on private capital markets enabled governments to mitigate investment frictions and improve capital allocation.

Keywords: Public Entrepreneurship

Citation

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Bitcoin and Beyond

By: Christian Catalini, Ravi Jagadeesan and Scott Duke Kominers

April 23, 2021 |
Article |
Project Syndicate

From the growing attention to Bitcoin and "decentralized finance" to the latest excitement spurred by non-fungible tokens, the crypto economy is here to stay. But will it develop the social consensus and institutional arrangements needed to go fully mainstream?

Keywords: Cryptocurrency; Crypto Economy; Finance; Currency

Citation

Venture Capital Booms and Startup Financing

By: William Janeway, Ramana Nanda and Matthew Rhodes-Kropf

2021 |
Working Paper |
Faculty Research

We review the growing literature on the relationship between venture capital booms and startup financing, focusing on three broad areas: First, we discuss the drivers of large inflows into the venture capital asset class, particularly in recent years—which are related to but also distinct from macroeconomic business cycles and stock market fluctuations. Second, we review the emerging literature on the real effects of venture capital financing booms. A particular focus of this work is to highlight the potential impact that booms (and busts) can have on the types of firms that VCs choose to fund and terms at which they are funded, independent of investment opportunities—thereby shaping the trajectory of innovation being conducted by startups. Third, an important insight from recent research is that booms in venture capital financing are not just a temporal phenomenon but can also be seen in terms of the concentration of VC investment in certain industries and geographies. We also review the role of government policy, exploring the degree to which it can explain the concentration of VC funding in the U.S. over the past forty years in just two broad areas—information and communication technologies (ICT) and biotechnology. We conclude by highlighting promising areas of further research.

Keywords: Venture Capital; Business Startups; Financing and Loans; Innovation and Invention; Government and Politics; Policy

Citation

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