Why do less and less people start their own business?

There are not many better things (personal things aside) that can happen to a job market candidate than getting mentioned by Tyler Cowen on Marginal Revolution, one of the most widely read economics blogs on the internet. This happened to Nicholas Kozeniauskas from NYU. His paper got judged to be “one of the more important papers of this job market season” by Tyler. And it has indeed many interesting results to offer. Continue reading Why do less and less people start their own business?

“How Do Venture Capitalists Make Decisions?”by Paul Gompers, William Gornall, Steven N. Kaplan, Ilya A. Strebulaev

There is a new NBER working paper out which could be of interest to those working on venture capital and entrepreneurial finance. Abstract: 

We survey 889 institutional venture capitalists (VCs) at 681 firms to learn how they make decisions across eight areas: deal sourcing; investment selection; valuation; deal structure; post investment value-added; exits; internal firm organization; and relationships with limited partners. In selecting investments, VCs see the management team as more important than business related characteristics such as product or technology. They also attribute more of the likelihood of ultimate investment success or failure to the team than to the business. While deal sourcing, deal selection, and post-investment value-added all contribute to value creation, the VCs rate deal selection as the most important of the three. We also explore (and find) differences in practices across industry, stage, geography and past success. We compare our results to those for CFOs (Graham and Harvey 2001) and private equity investors (Gompers, Kaplan and Mukharlyamov 2016).

Full paper here.

New research on immigrant entrepreneurship

Here is a very nice piece of scholarly work by Sari Pekkala and William R. Kerr on immigrant entrepreneurship in the US (NBER working paper version here, and here without the requirements to sign up). The paper provides us with some facts to debunk the very common popular belief that “immigrants steal our jobs”, which is a variant of the implicit misconception that the number of jobs in an economy is fixed. Continue reading New research on immigrant entrepreneurship

What Makes Entrepreneurs Valuable to Society?

Others have written before me about this paper by William Baumol. As it is very often the case with good papers, the main idea is quite simple. Scholars and policy makers are obsessed with entrepreneurship. They discuss prime examples such as Apple, Amazon and Google. And every local politician would love to have a Silicon Valley in his backyard. But at its heart, entrepreneurship is nothing more than people seeking economic opportunities. And, depending on the incentives a society provides, these businesses can be either socially valuable, a waste of resources, or, in the worst case, even destructive. Continue reading What Makes Entrepreneurs Valuable to Society?

Recent Trends in German Entrepreneurship

At ZEW (Centre for European Economic Research, Mannheim), we monitor recent trends and figures of entrepreneurship activity in Germany. A new report on the development in 2014 was released some days ago*. Overall, there is a stable decreasing trend in the number of newly founded companies since the mid 1990s which has continued. Continue reading Recent Trends in German Entrepreneurship