Sunday, August 7, 2011

Five Myths about New Ideas

I was reading the Sunday Tulsa World newspaper today, reviewing the opinion page and found an interesting research based piece into myths about entrepreneurs, venture capital and innovation.

The original piece is by Vivek Wadhwa, in the Washington Post, here.  Wadhwa is the director of research at the Center for Entrepreneurship and Research Commercializaton at Duke University, link here.

Here the list of 5 myths:
  1. America's typical entrepreneurs are in their 20's.  FALSE, research shows that the median age is 40.  70% are married and 43.5% have at least one child.
  2. Entrepreneurs are like top athletes:  They are born, not made.  FALSE, 52% were the first in their family to start a business, and only about 39% had an entrepreneurial father.
  3. College drop-outs make better entrepreneurs.  FALSE, companies founded by college graduates have twice the sales and workforce of companies whose founder didn't go to college.
  4. Women cannot cut it in the tech world.  FALSE, few girls get encouragement from their parents to study engineering.
  5. Venture capital is a prerequisite for innovation.  FALSE, less than 5% of venture capital goes to early-stage companies.
I found all of this to be fascinating and reassuring to me.  There's still time for me to make my own mark in the business or non-profit world.

I was particularly struck by myths 1 and 5.  For myth 1, it's clear that you need experience in business and in the world before most people can really formulate, organize, lead and execute a business start-up.  It's popularly believed that "experience" is a detriment to entrepreneurship but apparently not.

For myth 5, I've had some very limited exposure to venture capital but the conference I attended in Feb 2011, most of which was taught by venture capitalists, showed us the S-curve and the "valley of death".  Most venture capital investment happens in the late stage when it appears that a company will finally break even.  Most early stage angel investment is made by families, friends or by raiding a nest-egg.  The opinion piece says it best...venture capital follows innovation, it doesn't cause it.

Hopefully, Fab Lab Tulsa will be a platform for entrepreneurs to demonstrate and develop their ideas so as to better attract angel and venture capital investment.

Have a great week!

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