An interesting study has recently been released which calls into question the validity of the “always bet on management” mantra.
To study the impact of management talent on fundraising, Dr. David Townsend (North Carolina State U.) and Dr. Lowell Busenitz (U. Oklahoma) followed the capitalization outcomes for 144 Oklahoma-based technology ventures ranked for management strength and technology strength.
Not surprisingly, ventures which had a combination of strong management and strong technology were able to raise funds to meet their development needs.
More unusual were the findings that
The authors concluded that the ventures with weaker management and technologies had set their fundraising targets lower and, thus, were able to meet their expectations.
The report also indicates that a moderate amount of under-capitalization is not fatal in itself since enterprising management can utilize a wide range of strategies to overcome the cash shortfall.
Read the report summary here (PDF) and the press release here: “Study: Lack of capital not a ‘death sentence’ for start-ups“.
Thanks to Dr. David Townsend for sharing his findings with us.