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“User Entrepreneurs” Often Find Lasting Success

From our friends at TechColumbus comes a promising post about entrepreneurial success:

A recent Kauffman Foundation study reports that “user entrepreneurs” – those who have created innovative products or services for their own use then subsequently launched companies to commercialize them – have founded more than 46 percent of the innovative startups that have lasted five years or more in the United States.

“Users have ignited technological change in industries ranging from medical devices to sports equipment to juvenile products. In many cases, users, not producers, have the best information, and their incentive is to build something better for their own use. As a result, they are able to create truly novel innovations,” says Sonali Shah, assistant professor and Buerk Fellow at Foster School of Business, University of Washington, and co-author of the study.

Although user entrepreneurs account for only 10.7 percent of U.S. startups, they tend to be successful in terms of economic growth and innovation, including outside equity capital and the intensive use of IP protection.

Among the highlights of the study:

  • A high fraction of professional- and end-user entrepreneurs (almost six percent across all industries) received venture capital in their first six years of operations. •
  • Professional-user entrepreneurs, especially those in high-tech industries, seem to possess greater amounts of human capital relative to other types of entrepreneurs. •
  • End-user entrepreneurship may be an attractive path for women and some minority groups, with a relatively high fraction of these firms reporting receiving venture capital financing.

For more information, see the study Who Are User Entrepreneurs?

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