It seems serial entrepreneurship is the way to improving the state of black finance. A fascinating new study shows that becoming a serial entrepreneur has significant benefits over someone opening one single business, referred to as a “novice entrepreneur.”
The Productivity Advantage of Serial Entrepreneurs is a study from the National Bureau of Economic Research (NBER). Using statistical analysis based on data from entrepreneurs in Denmark over a 12-year period, researchers found some surprising trends with serial entrepreneurs.
Some important takeaway from the study:
- The serial entrepreneur has 67% higher sales than the novice, but also opens firms that are larger in terms of the initial capital and labor, and thus is 39%more productive.
- Female serial entrepreneurs do as well as male serial entrepreneurs, relative to the performance of novices of their own genders.
- The second firms of the serial entrepreneurs also stay in business longer than the first (and only) firms of the novices.
- As a group, all women open smaller companies than men (i.e., lower sales), but those who are female serial entrepreneurs are about as productive as all male entrepreneurs (including novices).
- Venture capitalists prefer funding serial entrepreneurs over novice entrepreneurs, and they receive more funding.
- On average, serial entrepreneurs employ 22% more people over the first six years in operation.
- Serial entrepreneurs achieve their higher sales with a modest increase in employment and also capital.
The study also identifies key traits of serial entrepreneurs. They tend to be:
- Have broad previous managerial experience.
- They also cultivate business and social networks that allow them to increase funding, customers, and gain knowledge.
Entrepreneurship is critical to improving the financial health black finance. The Association for Enterprise Opportunity’s president and CEO Connie Evans emphasized the importance of business ownership for black people.
“Self-employment can go a long way toward closing the racial wealth gap,” Evans says. “White adults have 13 times the median wealth of blacks, whereas white business owners have three times the wealth of their black counterparts. That is a significant difference—one that would help create economic opportunities for all people.”