Serial Entrepreneurs and Venture Survival: Evidence from U.S. Venture‐Capital‐Financed Semiconductor Firms

• DOI: http://doi.org/10.1002/sej.1161
• Date: 01 September 2014
• Published date: 01 September 2014
• Author: Yongwook Paik

SERIAL ENTREPRENEURS AND VENTURE

SURVIVAL: EVIDENCE FROM U.S.

VENTURE-CAPITAL-FINANCED

SEMICONDUCTOR FIRMS

YONGWOOK PAIK*

Marshall School of Business, University of Southern California, Los Angeles,

California, U.S.A

This article investigates the effects of prior firm founding experience, prior venture capital

(VC) financing experience, and prior success with regard to subsequent venture survival by

distinguishing serial entrepreneurs with and without prior VC financing experience. My analy-

sis shows that ventures founded by serial entrepreneurs perform better than those founded by

novice entrepreneurs regardless of whether entrepreneurs had prior success or failure.

However, contrary to expectations, this study finds that serial entrepreneurs without prior VC

financing experience perform better than serial entrepreneurs with prior VC financing expe-

rience, suggesting that there may be an inadvertent cost of learning about the VCs. Copyright

© 2013 Strategic Management Society.

INTRODUCTION

How does prior entrepreneurial experience affect

subsequent venture performance? This question is of

interest to many entrepreneurship scholars and prac-

titioners. For entrepreneurs, it may not be enough to

know that entrepreneurial experience will enhance

their skills in such a way that their subsequent

venture performance might be better than that of

their first venture.1They will ultimately want to

know whether they have a competitive advantage

over their novice competitors in subsequent ventures

before they commit to starting a venture again. By

the same token, investors of new ventures will want

to know whether it is worth financing experienced

entrepreneurs (given that many lack a track record of

success) rather than financing new entrepreneurs.

To investigate the effect of prior entrepreneurial

experience, I first need to understand serial entrepre-

neurs (MacMillan, 1986). Serial entrepreneurs are

those who have founded firms multiple times and

have operated them sequentially, as opposed to port-

folio founders, who have founded multiple firms and

operated them simultaneously in a parallel fashion

(Westhead and Wright, 1998). Serial entrepreneurs

are experienced or habitual entrepreneurs and are

distinguished from novice entrepreneurs, who are

founding firms for the first time (Westhead et al.,

2005b; Wright, Robbie, and Ennew, 1997a).

The extant literature investigating the relationship

between serial entrepreneurs and venture perfor-

mance shows that serial entrepreneurs generally fare

better than novice entrepreneurs, which suggests that

prior entrepreneurial experience has a positive effect

on subsequent venture performance (Delmar and

Keywords: entrepreneurship; serial entrepreneurs; venture

capital (VC); start-up; founder experience; learning

*Correspondence to:Yongwook Paik, Marshall School of Busi-

ness, Universityof Southern California, Los Angeles, CA 90089-

0808, U.S.A. E-mail: Yongwook.Paik@marshall.usc.edu

1The data from this study indeed show that 89 percent of VC

backed serial entrepreneurs had an outcome in their second

venture that was at least as good as their first venture, which

strongly suggests that prior entrepreneurial experience has a

positive effect on subsequent venture performance for an entre-

preneur, consistent with the results of Wright, Robbie, and

Ennew (1997b).

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Strategic Entrepreneurship Journal

Strat. Entrepreneurship J., 8: 254–268 (2014)

Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/sej.1161

Copyright © 2013 Strategic Management Society