2005/03/02 by PAUL GOMPERS, Paul A. Gompers, Josh Lerner +3 · 662 citations
Business, Management and Accounting · #Bureaucracy #Business #Corporate Finance and Governance #Entrepreneurial spirit #Entrepreneurship #Entrepreneurship Studies and Influences #Finance #Fishery #Industrial organization #Marketing #New Ventures #Political science #Private Equity and Venture Capital #Silicon valley #Spawn (biology) #Venture capital
paper · doi:10.1111/j.1540-6261.2005.00740.x
published in The Journal of Finance 60(2), 577-614 (Wiley)
openalex publication_date 2005/03/02 · openalex created_date 2025/10/10 · openalex updated_date 2026/08/04
ABSTRACT We examine two views of the creation of venture‐backed start‐ups, or “entrepreneurial spawning.” In one, young firms prepare employees for entrepreneurship, educating them about the process, and exposing them to relevant networks. In the other, individuals become entrepreneurs when large bureaucratic employers do not fund their ideas. Controlling for firm size, patents, and industry, the most prolific spawners are originally venture‐backed companies located in Silicon Valley and Massachusetts. Undiversified firms spawn more firms. Silicon Valley, Massachusetts, and originally venture‐backed firms typically spawn firms only peripherally related to their core businesses. Overall, entrepreneurial learning and networks appear important in creating venture‐backed firms.