ENTREPRENUERSHIP

DEVELOPMENT
ngs
What is the unique service/ product for Indian’s
you can think of?
Sector-wise GDP Growth in India
Employment in different sector – India
 Consumer types
• Rich & affluent people
• Upper middle
• Middle
• Lower middle
• Poor

• Conservatives - value conscious

• Radical
• Working women

• Rural customers
 Contemporary Indian
• Indian-ness Rising
• Super Multitasking with extremely low attention
• India's Next consuming class and the Rise of Visual
Communication
• Experiencing Vs Owning things & creating Social Value
• Rising Individuality and Dual Lives
 ++
Unit I Meaning of Entrepreneurship, types of
entrepreneurship, concept of intrapreneur, Myths and
Challenges associated with Entrepreneurship. Entrepreneurial
Traits. Difference between MSME and Start-ups, start-up life
cycle

Unit II Idea Generation, Identifying and Evaluating business

Opportunities, Introduction to Opportunity Analysis Canvas,
Business Model Canvas and Sections of Business Plans.

Unit III Forms of business ownership, Support systems for

entrepreneurs: Institutional support, Training Institutions,
Financial Institutions, Research and Technology, Sources of
Finance suitable for Startups. Introduction to pitching,
Introduction to Intellectual Property Rights.
1. Introduction to entrepreneurship
2. Intrapreneurship
3. Entrepreneurship Training
4. Idea generation – exercises
5. Evaluating business opportunities
6. Life cycle of enterprise
7. Business plan preparation
8. Implementing business plan
9. Support system for entrepreneurs
10.Global aspects of entrepreneurship

11.Assignment presentations
 Activities
• Debate
– It is Government’s responsibility to create employment

• Presentation
Entrepreneurship related schemes of GoI
Business / entrepreneurial ideas -
Segments: Agriculture
Manufacturing
Services
Entrepreneurial trait survey
Creativity traits among IPE students

• Case discussion
• Book discussion
• Entrepreneur we should take note of
• Agriculture
...
• Manufacturing
…
• Services
• Educational services
• Financial services
• Health services
• Tourism
• Transport services
• IT services
• Media and entertainment
• Telecom services
 Introduction to Entrepreneurship

According to Randstad Workmonitor

survey in mid 2017 83% of Indian
workforce prefers to be
There is tremendous Entrepreneurs.
interest in
Randstad Workmonitor survey covers
entrepreneurship in India 33 countries around the world
and around the world.
This is higher than the global average
of 53 per cent.

81 per cent (in 2018) said that they are

considering leaving current jobs.

1-30
 Indications of Increased Interest
in Entrepreneurship

• Books
– Amazon.com lists over 45, 000 books dealing with
entrepreneurship and 118, 000 focused on small business.
• Google
– Retrieves
• 0.19 billion records on entrepreneurship
• 0.24 billion records on entrepreneur

1-31
• The word entrepreneur is originally French. It literally means “go-
between”

• Marco Polo who established trade with east was an early “go-
between”

• In middle-ages, the term entrepreneur was used to describe both

an actor and a person who managed large production projects,
like great architectural works like castles, fortifications etc.

• Connection of Risk with entrepreneurship developed in the 17th

century, with an entrepreneur being a person who entered into
contractual agreement with Government to perform a service or
supply some products

• In 18th century, the person with capital was differentiated from the
one who needed capital. An entrepreneur was the capital seeker

• 19th and 20th Century entrepreneurs were viewed with an

economic perspective.
• An entrepreneur organizes and operates an enterprise for
personal gain. He employs three other factors of production
and brings in his own initiative, skill and ingenuity in
planning, organizing, and administering the enterprise.

• Entrepreneur as an innovator was established in middle of

the20th century.
• The function of an entrepreneur is to reform the pattern
of production by exploiting an invention or an untried
technological method of producing an old one in a new
way, opening a new source of supply of materials or a
new outlet of products, by organizing a new industry.

• Entrepreneur today is one who

– Takes initiative,
– Organizes / reorganizes the social and economic
mechanism to turn resources and situations to
practical ends,
– Takes risk in doing so.
• An economist looks at Entrepreneur as one who brings
resources, labour, materials and other assets into
combinations that make their value greater than before.

• To a psychologist entrepreneur is one who is driven by

certain internal forces to obtain / attain something, to
experiment, to accomplish something.

• To a businessman he could be a threat/ resource.

 What is Entrepreneurship?

• Academic Definition
– Entrepreneurship is the process by which individuals
pursue opportunities without regard to resources they
currently control.
– It is a dynamic process of creating incremental wealth.
Wealth is created by individuals who take risks of equity,
time, etc., to provide value for some product or service.

• What Entrepreneurs Do
– Entrepreneurs assemble and then integrate all the
resources needed –the money, the people, the business
model, the strategy—needed to transform an invention or
an idea into a viable business.
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 Skills Required in Entrepreneurship
Technical skills Business Management Skills

Communication skills – oral & Decision Making

written Human relations
Ability to organize Marketing
Coach Finance
Business Management Skills Accounting
Planning & Goal setting Control
Negotiation
Managing growth

Personal Entrepreneurial Skills

Discipline / Inner control Persistence

Leadership Innovativeness
Manage change Risk taking
Entrepreneur
An entrepreneur is an individual who starts and runs a
business with limited resources and planning, and is
responsible for all the risks and rewards of his or her
business venture. The business idea usually encompasses a
new product or service rather than an existing business
model.

Techno-preneur
Techno-preneurship term is a derivative of two words,
namely 'technology' and 'entrepreneurship'.
In general, the word technology is used to refer to the
practical application of knowledge to the industry or as a
framework of knowledge that is used to create the tools, to
develop expertise and materials in order to solve the existing
problems.
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Micro-preneur
A micro-preneur is an entrepreneur willing to accept the risk
of starting and managing very small type of business, that
allows him or her to do the kind of work s/he wants to do.

Innovator
An innovator, in a general sense, is a person who is one of
the first to introduce into reality something that is better
than what was before. That opens up a new area for others
and achieves an innovation.

Manager
Manager is person responsible for supervising and
motivating employees and for directing the progress of an
organization.

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Small Business Owner
selling already available goods or services as a dealership.

Intrapreneur

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 Corporate Entrepreneurship
1 of 2

• Corporate Entrepreneurship
– Is the conceptualization of entrepreneurship at the firm
level.
– All firms fall along a conceptual continuum that ranges
from highly conservative to highly entrepreneurial.
– The position of a firm on this continuum is referred to as its
entrepreneurial intensity.

1-41
 Corporate Entrepreneurship
2 of 2

Entrepreneurial Firms Conservative Firms

• Proactive • Takes a more “wait and see”

posture
• Innovative
• Less innovative
• Risk taking
• Risk adverse

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Why Become an Entrepreneur?

The three primary reasons that people become

entrepreneurs and start their own firms

Desire to be their own boss

Desire to pursue their

own ideas

Financial rewards

1-43
Characteristics of Successful Entrepreneurs
2 of 3

• Passion for the Business

– The number one characteristic shared by successful
entrepreneurs is a passion for the business.
– This passion typically stems from the entrepreneur’s belief
that the business will positively influence people’s lives.
• Product/Customer Focus
– A second defining characteristic of successful
entrepreneurs is a product/customer focus.
– An entrepreneur’s keen focus on products and customers
typically stems from the fact that most entrepreneurs are,
at heart, craftspeople.

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Characteristics of Successful Entrepreneurs
3 of 3

• Tenacity Despite Failure

– Because entrepreneurs are typically trying something new,
the failure rate is naturally high.
– A defining characteristic for successful entrepreneurs’ is
their ability to persevere through setbacks and failures.
• Execution Intelligence
– The ability to fashion a solid business idea into a viable
business is a key characteristic of successful entrepreneurs.

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 Common Myths About Entrepreneurs
1 of 5

• Myth 1: Entrepreneurs Are Born Not Made

– This myth is based on the mistaken belief that some people
are genetically predisposed to be entrepreneurs.
– The consensus of many studies is that no one is “born” to
be an entrepreneur; everyone has the potential to become
one.
– Whether someone does or doesn’t become an entrepreneur,
is a function of the environment, life experiences, and
personal choices.

1-47
 Common Myths About Entrepreneurs
2 of 5
Although no one is “born” to be an entrepreneur, there are common traits
and characteristics of successful entrepreneurs

• Achievement motivated • Optimistic disposition

• Alert to opportunities • Persuasive
• Creative • Promoter
• Decisive • Resource assembler/leverager
• Energetic • Self-confident
• Has a strong work ethic • Self-starter
• Is a moderate risk taker • Tenacious
• Is a networker • Tolerant of ambiguity
• Lengthy attention span • Visionary
1-48
 Common Myths About Entrepreneurs
3 of 5

• Myth 2: Entrepreneurs Are ‘Gamblers’

– Most entrepreneurs are moderate risk takers.
– The idea that entrepreneurs are gamblers originates from
two sources:
• Entrepreneurs typically have jobs that are less
structured, and so they face a more uncertain set of
possibilities than people in traditional jobs.
• Many entrepreneurs have a strong need to achieve and
set challenging goals, a behavior that is often equated
with risk taking.

1-49
 Common Myths About Entrepreneurs
4 of 5

• Myth 3: Entrepreneurs Are Motivated Primarily by

Money
– While it is naïve to think that entrepreneurs don’t seek
financial rewards, money is rarely the reason
entrepreneurs start new firms.
– In fact, some entrepreneurs warn that the pursuit of money
can be distracting.

1-50
 Common Myths About Entrepreneurs
5 of 5

• Myth 4: Entrepreneurs Should Be Young and

Energetic.
– The most active age for business ownership is 35 to 45
years old.
– While it is important to be energetic, investors often cite
the strength of the entrepreneur as their most important
criteria in making investment decisions.
• What makes an entrepreneur “strong” in the eyes of an
investor is experience, maturity, a solid reputation, and
a track record of success.
• These criteria favor older rather than younger entrepreneurs.

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Changing Demographics of Entrepreneurs
1 of 3

Women Entrepreneurs
• 14% of the Indian businesses
run by women entrepreneurs.
• 8.05 million out of the 58.5
million entrepreneurs
• 2.76 million women (34.3% )
work in agriculture sector
• 5.29 million (65.7% ) work in
non-agricultural sectors
6th Econ Census

1-53
Sridhar Vembu

CEO of Zoho Corp. (formerly AdventNet

Inc.), the company behind the Zoho suite
of online applications.

He co-founded AdventNet in 1996, and

has been CEO since 2000. AdventNet has
transformed itself from a modest
beginning as a software company serving
network equipment vendors to a be an
innovative online applications provider.

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Dr.Arokiaswamy Velumani
Thyrocare’s Velumani:
lives in a small quarter, but helms
a Rs 1, 320-crore company.

1-55
Mahesh Gupta Chairman Kent RO
Systems
A mechanical engineer started in
1985, from a small room in his
house with just 20, 000 which he
had saved from his job with IOCL.

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Kailash Katkar
Born in a small village at Rahimatpur in
Maharashtra, Kailash Katkar worked his
way to the top to be chairman and CEO
of INR 200 Cr business. He is the man
behind Quickheal technologies Pvt Ltd.

1-57
P C Mustafa ( Coolie’s Son who Set
Up 100 Crore Company with just
25, 000 ) idli and dosa batter made
by P C Mustafa’s company ID

1-58
Patricia Narayan
selling eateries from a mobile cart
on the Marina beach

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Dhiru Bhai Ambani

India’s largest private sector

company. Reliance is the first Indian
company to feature in Forbes 500 list.
Dhirubhai Ambani was the most
enterprising Indian entrepreneur.

1-60
Karsanbhai Patel –

Man behind NIRMA

The ‘Nirma’ success story of how
an Indian Entrepreneur took on the
big MNCs and rewrote the rules of
business

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Prem Ganapathy – The Dosawala

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Jyothi Reddy

Mrs. Jyothi Reddy has made a

spectacular travel from a field
laborer to the CEO of an
organization in the US.

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Ramesh Babu

owns a rent-a-car fleet of 67

alternative cars.

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Nitin Godse

Excel Gas and Equipments Pvt Ltd

1-65
Economic Impact of Entrepreneurial Firms

• Innovation
– Is the process of creating something new, which is central
to the entrepreneurial process.
– Small firms are twice as innovative per employee as large
firms.
• Job Creation
– In the past two decades, economic activity has moved in
the direction of smaller entrepreneurial firms, which may
be due to their unique ability to innovate and focus on
specialized tasks.

1-66
 Entrepreneurial Firms’ Impact on Society and
Larger Firms

• Impact on Society
– The innovations of entrepreneurial firms have a dramatic
impact on society.
– Think of all the new products and services that make our
lives easier, enhance our productivity at work, improve
our health, and entertain us in new ways.
• Impact on Larger Firms
– Many entrepreneurial firms have built their entire business
models around producing products and services that
help larger firms become more efficient and effective.

1-67
 The Entrepreneurial Process

The Entrepreneurial Process Consists of Four Steps

Step 1: Deciding to become an entrepreneur.
Step 2: Developing successful business ideas.
Step 3: Moving from an idea to an entrepreneurial firm.
Step 4: Managing and growing the entrepreneurial firm.

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 The Entrepreneurial Process
• Recognizing opportunities & Generating ideas
• Feasibility analysis
• Writing a business plan
• Industry and competitor analysis
• Developing an effective business model
• Preparing a proper ethical & legal foundation
• Assessing financial strength & viability
• Taking the venture through funding process
 Intrapreneurship
• Typical corporate culture has a climate and a reward system
that favor conservative decision making. Workers are
expected to adhere to given instructions, not to make
mistakes, not to take initiatives, wait for instructions ...

• Word “intrapreneur” was coined by Gifford Pinchot in a 1978.

It was later popularized by Steve Jobs in a 1985

Steve Jobs said, “The Macintosh team was what is commonly

known as intrapreneurship… a group of people going, in
essence, back to the garage, but in a large company.”
• Intrapreneurial culture encourages spirit of entrepreneurship
within the existing organization.

• "Intrapreneurship refers to employee initiatives in

organizations to undertake something new, without being
asked to do so.“

• Companies support intrapreneurs with finance and access to

corporate resources, while intrapreneurs create innovation
for companies.
• Post-it Notes
• Sony PlayStation
• Java Programming Language
• Digital Light Processing Technology
• ELIXIR Guitar Strings
 Advantages of Intrapreneurship

• Capital
• Existing consumer base
• Cross-functional expertise
• Infrastructure, including brand name
Difference among Traditional managers,
Entrepreneurs & Intrapreneurs
 Traditional Entrepreneurs Intrapreneurs
Managers
Primary Traditional Independence, Independence and
motives corporate rewards opportunity to ability to advance
create, and in the corporate
money rewards

Time Short term – meet Survival and Between

orientation quotas, targets, achieving 5-10 traditional
etc. year growth of managers and
business entrepreneurs,
depending on
urgency and corp
time table
Activity Delegates & directs Direct involvement Direct
involvement
Risk Careful Moderate risk Moderate risk
taker taker
 Traditional Entrepreneurs Intrapreneurs
Managers
Status Concerned about Not concerned Not concerned
status symbols about status about status.
Desires
independence

Failure & Avoids mistakes & Deals with Hides risky

Mistakes surprises mistakes & projects till
failures ready

Decisions Usually agrees Follows dreams Gets others to

with higher with decisions agree to help
management achieve dreams

Serves who? Others Self & customers Self, customers,

& sponsors
 Lockheed Martin
• Idea: It wouldn’t be a post about intrapreneurship without the
famous “Skunk Works” project.
• Skunk Works is another name for Advanced Development
Programs. Lockheed Martin basically allowed Kelly Johnson,
Skunk Works founder, to work as an autonomous
organization with a small, focused team.

• Benefit: Skunk Works created some of the most innovative aircraft

models, including the U-2, the Lockheed SR-71 Blackbird,
F-117 Nighthawk, F-22 Raptor etc.
 Texas Instruments
• Idea: A TI researcher, Larry Hornbeck, had been
experimenting with technology using tiny mirrors to redirect
photons for almost a decade. In 1987, Hornbeck and his team
developed Digital Micro-mirror Device.
• DMD was used for printing airline tickets at first but soon
after TI started an internal venture called Digital Imaging
Venture Project to expand on the efforts.

• Benefit: For a long time, video projectors weighed the equivalent to a

small child and cost upwards of $15, 000. Hornbeck realized this
technology could greatly decrease the size and cost of the digital
projector and it soon became an industry standard.
 W.L. Gore
• Idea: One employee identified that one of their products,
ePTFE a coating for push-pull cables, could be used for
comfortable guitar strings.

• Benefit: The coated strings proved to only be marginally more

comfortable but they kept their tone longer than conventional guitar
strings. After W.L. Gore launched them under the brand name ELIXIR
Strings, they are now the No. 1 selling acoustic guitar string.
 Google
• Idea: Google allows time for personal projects. Some of
Google’s best projects come out of their 20 percent time
policy. One of these is something you probably use multiple
times a day, Gmail.

• Benefit: Paul Buchheit, the creator of Gmail, started on the

project in 2001 and worked up to its launch in 2004.

Gmail became the first email with a successful search feature and the option to
keep all of your email instead of frantically deleting to stay under your limit.
 Shutterstock

• Idea: Every year, Shutterstock hosts an annual hack-a-thon

over the span of 24-hours. These challenges are designed to
allow employees to pursue any ideas they have for the
betterment of the company.

• Benefit: Spectrum—an awesome user experience tool that allows you to

search through Shutterstock royalty-free images, video clips, and music
tracks by only using color.
• Oculus—a data analysis tool that came out of the 2012 hack-a-thon
and is now used at Shutterstock every day.
 3M
• Idea: Sometimes, intrapreneurship happens by accident.
Dr. Spencer Silver, a scientist at 3M, was attempting to
create an extremely strong adhesive to use in aerospace
technology. Instead, he accidentally created a light adhesive
that stuck to surfaces well but didn’t leave a nasty residue.

• At “3M” employees could spend their 15% time working on

the projects they like for the betterment of the company. On
the initial success of the project, 3M even funds it for further
development.

• Benefit: Instead of throwing away this idea because it didn’t solve the
problem at hand, he stuck with it until he found a use for it. After many
years of persistence and spreading the word it finally clicked with
someone else, Art Fry. Post-It notes were born
 Sun Microsystems

• Idea: Patrick Naughton, a developer, almost left Sun in 1995

because he believed they were missing out on the fast-
growing PC consumer market. He was convinced to stay and
help Sun set up a group dedicated to the consumer market.
This is where group member created an elegant object-
oriented programming language called Oak, which was later
renamed Java.

• Benefit: This was initially created to help set up Time Warner cable
boxes. When that deal fell through, Bill Joy, co-founder of Sun,
recognized the value of Java and that it could be implemented across all
different platforms.
 Sony
• Idea: Ken Kutaragi, a relatively junior Sony Employee, spent
hours tinkering with his daughters Nintendo Switch to make it
more powerful and user friendly. What came from his work is
one of the most recognizable brands in the world today, The
Sony Playstation.

• Benefit: Many Sony bosses were outraged at his work, thinking that
gaming is a complete waste of time. Luckily someone in a senior position
saw the value in the product and thankfully so, because now Sony is one
of the world leaders in the prosperous gaming industry.
 Facebook

• Idea: Originally called the “awesome button, ” the Facebook

Like button was first prototyped in one of Facebook’s
infamous hack-a-thons.

• Benefit: Facebook has never released statistics based on the like rate and
certain time frames. But it is pretty evident how the invention of the like
button affects us on a daily basis.
 Indian Intrapreneurship Programs
#1 Zensar Technology

• At Pune-based Zensar Technologies, Vijay Gaikwad, heading the Technology

Innovation Group, has been credited with building a tool called the Solution
BluePrint, which has automated the software engineering process.

#2 Kinetic India

• The idea for their variant Zing, came through one of their employees who
suggested that they must have a mobile charger in their mobike.

#3 Texas Instruments

• Single chip solution for ultra low cost handsets is only one of the many solutions
that has emerged out of an intrapreneurial mindset of employees at Texas
Instruments.
4 Intel

Anil Paranjape, an Entrepreneur in Residence at Intel, built a retail automation

project that neighbourhood kirana stores could use to compete with large retailers.
Intel launched this as the pilot project, installing the point-of-sale (POS) device at
small retail outlets in Mumbai.

5 Infosys Technologies

OnMobile Global, a mobile value-added services firm incubated within Infosys

Technologies Ltd, has grown into a full-fledged company which even went on to
release an IPO.

6 Connect M

Sasken Communications Technology Ltd, partnered with venture capital outfit IDG
Ventures India to set up a new start-up unit, Connect M, with employees who seeded
the idea holding an equity stake in the start-up.

7 mjunction

mjunction services ltd, an E-commerce company began as a 50:50 venture promoted

by Tata Steel and SAIL. mjunction rose to become world’s biggest e-marketplace for
steel led by its visionary leader and intrapreneur, Viresh Oberoi who empowered his
team to think and work like entrepreneurs.
8 ITC

The idea of e-choupal, an ITC division germinated when Sivakumar a manager in the
ITC Group’s agribusiness unit, approached ITC’s chairman, with a request of Rs 50
lakh to test an idea. He wanted to procure farm produce from soya farmers in Madhya
Pradesh, thereby eliminating middlemen. Today, e-Choupal, reaches out to over 4
million farmers growing a range of crops in over 40, 000 villages across 10 states.

9 Microsoft

Microsoft India Development Centre, has developed the Microsoft BizTalk RFID, a
device management and event processing platform that defines the standard for the
way radio frequency identification tags will be utilized by the end consumer.

10 HSBC

In recent times the rise of leaders such as Naina Lal Kidwai of HSBC, is being seen as
the rise of intrapreneurship in the banking space.
 Intrapreneurship Programs

1. Speed Boat Model

The Speed Boat model is a process in which an autonomous team of internal

experts, typically comprising 10–20 people, is set up as an individual
department.

Given their expertise in relevant fields, their main task is to generate new
business ideas, validate them, and return these ideas back to the operating
business areas or to start with the execution. The focus throughout this
intrapreneurship programs process is on -

Constantly developing new business ideas and building an efficient force

with a high degree of expertise in the implementation of innovation
projects.
 Intrapreneurship Programs
2. Sprint Model
• The Sprint Model is a process in which a team of employees temporarily
dedicate their time to an innovation project.

• Given their know-how in relevant fields, their main task is to generate new
business ideas, validate these, and in a next step, return the ideas back to the
operating business areas or to start with production.

• Moreover, the model forces teams to make faster decisions; there is no time to
question outcomes or to look for more data to support certain aspects of a project.

• This process helps teams generate a large volume of ideas, build on them, learn
from them and move forward in a compressed amount of time–which is how
entrepreneurs work.

The focus throughout the process is on:

Developing new business ideas and building an effective force in the

implementation of innovation projects
 Intrapreneurship Programs
3. Entrepreneur in Residence
The target of this approach is to discover entrepreneurial talents from
outside the company and to integrate them into newly created positions or
the intrapreneurship programs.

“Entrepreneurs in Residence” are given the freedom and the resources to

build up holistic and visionary projects. Hiring someone external for a specific
task facilitates internal arguments on why the position has been excluded
from some bureaucratic processes. Moreover, strong result-oriented
incentives lead to entrepreneurial actions by the talents.
The focus of this program is on:

• Implementing innovative projects faster

• Bringing specific expertise to the company, and
• Integrating entrepreneurial behavior into the company culture
 Intrapreneurship Programs
4. Time Off Model

First, participants must work on something that is explicitly not their day job
where they decide for themselves what they will be working on, who they are
going to work with, and how they are going to do it.

Secondly, they must deliver something in 24 hours.

It ends with a delivery report that can be a video, a blog post, or a screenshot
that explains what an individual or a team did, and how it worked out (or how
it did not).

• Time-off can result in a boost of motivation and performance of

employees in a very short time
• The intense pace creates pressure to abandon hesitation and produce
fearlessly.
 Intrapreneurship Programs
5. Speed Lane Model

• The target of this intrapreneurship program is to first filter the best

internal available ideas and then provide the teams of
employees with all the time necessary to realize it.

• In a first step, employees who already have a business idea are

matched with employees that do not, but who are highly
motivated to participate.

• Pre-selection of internally available ideas puts the focus on the most

relevant ideas
 Intrapreneurship Programs
6. Tool Centered Model
Many formats are professionalized and structured by the use of the right
tools.

These tools contain work materials, software, and templates from the area of
Lean Startup, Design Thinking, etc.

The advantage of the tool centered model is that no mentors are needed as
teams can work on their business idea while receiving crucial guidance (and
feedback) by the tool.

Software leader Adobe released the Adobe Kick-Box, an innovation

methodology toolkit that provides a blueprint for internal innovation as part
of an open source, in 2014.
• Access to resources for employees to validate their business ideas
• STARTUP FAILURE RATE STATISTICS.
– A bit more than 50 percent of small businesses fail
in the first four years.
– In fact, of all small businesses started in 2011:
– 4 percent made it to the second year.
– 3 percent made it to the third year.
– 9 percent made it to the fourth year.
– 3 percent made it to the fifth year.
• Within 3 years, 92% of startups failed. Of those who failed 74%, failed due to premature scaling.
Premature scaling means spending money on marketing, hiring etc. either before you found a working business model (you acquire users for less than the revenue they bring) or in
general spending too fast while failing to secure further financing.
As far as I know, tech. startups have highest rate of failure among all industries mainly due to number of uncertainties that come with launching something new/innovative to the market.

Other interesting findings from the report:

Founders that learn are more successful: Startups that have helpful mentors, track metrics effectively, and learn from startup thought leaders raise 7x more money and have 3.5x better
user growth.
• Startups that pivot once or twice times raise 2.5x more money, have 3.6x better user growth, and are 52% less likely to scale prematurely than startups that pivot more than 2 times or
not at all.
• Many investors invest 2-3x more capital than necessary in startups that haven’t reached problem solution fit yet. They also over-invest in solo founders and founding teams without
technical cofounders despite indicators that show that these teams have a much lower probability of success.
• Investors who provide hands-on help have little or no effect on the company’s operational performance. But the right mentors significantly influence a company’s performance and
ability to raise money. (However, this does not mean that investors don’t have a significant effect on valuations and M&A)
• Solo founders take 3.6x longer to reach scale stage compared to a founding team of 2 and they are 2.3x less likely to pivot.
• Business-heavy founding teams are 6.2x more likely to successfully scale with sales driven startups than with product centric startups.
• Technical-heavy founding teams are 3.3x more likely to successfully scale with product-centric startups with no network effects than with product-centric startups that have network
effects.
• Balanced teams with one technical founder and one business founder raise 30% more money, have 2.9x more user growth and are 19% less likely to scale prematurely than technical or
business-heavy founding teams.
• Most successful founders are driven by impact rather than experience or money.
• Founders overestimate the value of IP before product market fit by 255%.
• Startups need 2-3 times longer to validate their market than most founders expect.This underestimation creates the pressure to scale prematurely.
• Startups that haven’t raised money over-estimate their market size by 100x and often misinterpret their market as new.
• Premature scaling is the most common reason for startups to perform worse. They tend to lose the battle early on by getting ahead of themselves.
• B2C vs. B2B is not a meaningful segmentation of Internet startups anymorebecause the Internet has changed the rules of business. We found 4 different major groups of startups that all
have very different behavior regarding customer acquisition, time, product, market and