Document Type
Article
Publication Date
6-1-2006
Abstract
Risk is inherent in decisionmaking when uncertain parameters and outcomes are involved. In the creation of a new venture, both entrepreneurs and their subsequent investors assume and share a variety of risks emanating from a multitude of such uncertain parameters of the early developing venture. One such midstage investor, the venture capitalist, attempts to mitigate the risks of investing in a new venture by incorporating detailed market, intellectual property strategy, financial and managerial elements into his or her investment decisionmaking analysis. Since venture capitalists are historically successful less than 20 percent of their investments in nascent companies, it appears that despite an extensive quantitative analysis of a new venture, there is a “problem of practice”—failure to make the best possible investment the majority of the time. On the other hand, successful serial entrepreneurs create consecutive new businesses despite an overall startup failure rate of 95%. Do successful serial entrepreneurs utilize distinctive ways of perceiving and assessing risk that venture capitalists do not appreciate? Can further knowledge be obtained by studying decisionmaking characteristics of successful serial entrepreneurs that could benefit both nascent entrepreneurs and venture capitalists in new business development? Can investors utilize the identification of certain entrepreneurial characteristics as an adjunctive tool in their decisionmaking regimen? This information can be used to predict entrepreneurial venture success bridging a “practice gap” for venture capitalists and other investors in the entrepreneurial process. This study attempts to identify and analyze differences in specific determinant traits of successful serial entrepreneurs by examining the differences of both serial entrepreneurs and venture capitalists in their qualitative decision making processes to invest in a new venture. In addition, this study will characterize certain elements of risk perception and supporting characteristics that play a role in the risk transference between serial entrepreneurs and potential future stake holders.
Keywords
decision making
Rights
© The Author(s). Kelvin Smith Library provides access for non-commercial, personal, or research use only. All other use, including but not limited to commercial or scholarly reproductions, redistribution, publication or transmission, whether by electronic means or otherwise, without prior written permission is strictly prohibited.
Department/Center
Design & Innovation
Recommended Citation
Papay, Francis A., "Risk Transference and Risk Perception Analysis of Serial Entrepreneurs and Venture Capitalists" (2006). Student Scholarship. 362.
https://commons.case.edu/studentworks/362