Julian Lange

Pre-start-up formal business plans and post-start-up performance: A study of 116 new ventures

Abstract This study examined whether writing a business plan before launching a new venture affects the subsequent performance of the venture. The dataset comprised new ventures started by Babson College alums who graduated between 1985 and 2003. The analysis revealed that there was no difference between the performance of new businesses launched with or without written business plans. The findings suggest that unless a would-be entrepreneur needs to raise substantial start-up capital from institutional investors or business angels, there is no compelling reason to write a detailed business plan before opening a new business.

Smart money? The impact of having top venture capital investors and underwriters backing a venture

One hundred and sixty two venture-capital-backed internet and software companies were examined that floated IPOs in 1998 and 1999 to see how the quality of the venture capital firm and the quality of the underwriter affected market capitalization. It was found that companies backed by top venture capital firms and taken public by top underwriters had higher market capitalizations and produced higher returns for their venture capitalists than other companies. In the post-IPO market, only the quality of the underwriter made a difference to the market capitalization. It was also found that there was a noticeable deterioration in the overall pre-IPO financial performance in the 1998-1999 era compared with the 1980s.

Angel Networks for the 21st Century: An Examination of Practices of Leading Networks in Europe and the U.S.

Developments in web technology are creating new opportunities for entrepreneurs and venture investors alike and facilitate the emergence of new breeds of introduction services connecting these parties more efficiently. The article relies on clinical analyses of over 40 identified “best practice” angel networks in the U.S. and Europe to provide a systematic study of the newest and most innovative practices in angel networks, focusing in particular on the use of information technology to facilitate the flow of ideas and capital to start-ups and early-stage companies and its implications for tomorrows private equity markets and the financing of high-potential ventures. It highlights two simultaneous polar developments, one toward the mass distribution of information regarding start-up opportunities (entrepreneur-centric networks) and the other, in reaction to the first, toward extreme screening of the information for a select audience (investor-centric networks).

Born Lucky? A Study of the Birthdates and Ages of Paradigm-Shifting Entrepreneurs

We studied the age of entrepreneurs at the time when they started companies that made significant contributions to the birth and growth of the micro/personal computer industry; we also looked at their birthdates. The main reason for our study was to test Gladwell’s widely disseminated assertion that paradigm changers in that industry were born between 1953 and 1955 and were 25 years old or younger when they started their ventures. In contrast to Gladwell’s sample of just three companies, Apple, Microsoft, and Sun Microsystems, and the seven entrepreneurs who founded them, our data set comprised 74 companies and 89 entrepreneurs. Unlike Gladwells’s seven entrepreneurs, all of whom were born between 1953 and 1955, our 89 entrepreneurs — including the Gladwell seven — were born between 1917 and 1965 and their average age when they started their ventures was 34.

Legitimation of Cleantech Companies: Venture Capital Financing and Federal Government Funding

We studied 56 venture-capital-backed companies that received financial support from the U.S. Department of Energy. We argued that those companies derived their legitimacy with the DOE in large part from their lobbying in Washington and from their venture capital firms. We reasoned that the greater their legitimacy from the viewpoint of the DOE, the more federal funding they received. We found that the amount of federal funding correlated with the amount of venture capital and with the amount spent on lobbying, but not with the reputation of their venture capital firms. Companies received, on average, one dollar of federal funding for each dollar of venture capital.