Frontiers of Entrepreneurship Research
1996 Edition

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HIGH TECH VS. NON-TECH; VC VS. NON-VC: SORTING OUT THE EFFECTS

Robert H. Keeley, University of Colorado-Colorado Springs

Robert W. Knapp, University of Colorado-Colorado Springs

James T. Rothe, University of Colorado-Colorado Springs


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INTRODUCTION
BACKGROUND
SAMPLE AND METHOD
ANALYSIS
CONCLUDING COMMENTS
REFERENCES


ABSTRACT

The histories of fifty-two start-up companies are examined to determine whether natural groupings occur among them. Four divisions are created: (1) small with limited growth, (2) small but high performing, (3) venture capital-backed non-technical, and (4) venture capital-backed technical. The first two groups ("small") share many attributes as do the second two ("large") with far fewer attributes being common between the large and small samples. Start-ups backed by venture capital (our "large" group) appear to be based on a great idea, one that defines a major new business or dramatically changes an existing industry. "Small" start-ups, even those that perform very well, represent incremental change in an industry. Their success depends not so much on the quality of the idea as on the execution of the business strategy. "Large" and "small" start-ups have different determinants of success. Lessons learned from one group may have limited value to the other, and studies that inadvertently combine the two may reach misleading conclusions.

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Last Updated 5/1/97 by YuBei Teng.

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