TIE1: Digital Day: New Ventures and Entrepreneurship
Startup Goals, Financial Constraints and the Effects on Performance
Eberhard Karls Universität Tübingen, Deutschland
Goals are at the core of each business activity. They lead to purposefully directed behavior and, if appropriately set, positively influence firm performance. On the contrary, restricted financial resources inhibit positive firm development. In this study, I uncover the goals of venture-capital-supported startups, and how their goal setting differs conditional on their financial situation. I also reveal the interaction of startups’ goals and their financial situation on performance. Using a unique proprietary dataset with 145 startups and 587 observations by an international CVC, I find startups in an early development stage to mainly think about their products/operations, clients/users and their financial situation. Financially constrained startups do not significantly more often seek external financial help, but significantly more frequently set themselves revenue-related goals. Overall, I find goals related to human resources or products/operations to positively influence performance. These findings suggest that setting appropriate goals is crucial for positive startup performance as startups persist to their goals over several periods. The results also indicate that the CVC can influence what startups strive for by relieving their financial constraints or deciding not to do so.
Capturing digital opportunities - the role of founder experience
1German Graduate School of Management and Law, Heilbronn; 2Frankfurt School of Finance & Management, Frankfurt/Main; 3Leibnitz-Centre for European Economic Research, Mannheim
In young, technology-driven firms, founders play an important role in determining the technological direction of the firm. Digital technologies offer risky but promising technological opportunities for those firms that are able to recognize and capture them. This ability is influenced by the technical expertise and experience of the founder. Using a sample of start-ups which were founded in Germany between 1999 and 2016, we investigate the effect of founder technical experience - both prior to founding and acquired through in-firm activities - on the ability of the firm to capture digital opportunities. We find that prior related experience influences the speed at which firms are able to recognize and capture digital technologies and demonstrate the persistence of this effect which extant studies have not directly considered. Related prior experience allows firms to overcome the constraint of their original technology choices and capture opportunities in new technologies. The results have implications for founders in terms of their choice of founding team members and individuals that join the top management team at a later stage.