The Leading Independent Resource for Top-tier MBA Candidates
Menu


Home » News » News » Harvard Business School on Entrepreneurship Funding

Harvard Business School on Entrepreneurship Funding

There’s no doubt that entrepreneurs are innovative and have a ton of grit. Unfortunately, according to Harvard Business School assistant professor Andy Wu, that determination and creativity doesn’t always translate into funding. Often, entrepreneurs are short-sighted when it comes to where to find funding. And while there are discussions and classes all about starting a business, there are few learning opportunities dedicated to entrepreneurship funding—financial and non-financial—to bring the idea to life.

To examine how the entrepreneurial community looks at funding, Wu along with his colleagues David R Clough, Tommy Pan Fang, and Balagopal Vissa published a paper titled, Turning Lead Into Gold: How Do Entrepreneurs Mobilize Resources to Exploit Opportunities?

ANDY WU
Assistant Professor of Business Administration

What they found is that too much focus is placed on raising money and signing contracts, and not enough emphasis is placed on informal and non-financial resources. And the reality is that these resources can make or break a business.

“Entrepreneurs are more successful when they can leverage non-market, non-pecuniary resources,” Wu says. “We think that is totally the wrong mindset…The challenge to raising financial capital is often related to a lack of those other resources.”

In particular, there are three areas of non-financial funding where entrepreneurs tend to come up short:

  1. Searching for resources outside of immediate connections
  2. Non-market resources
  3. Transferring resources through informal transactions.

1. Resources Outside of Immediate Connections

When looking for resources, it’s fine to start with the people you know, but you can’t stop there. Your network is too narrow. Instead, you need an outward-looking mindset where you search for investors and partners outside of your immediate network.

2. Non-Market Resources

The people who will help you succeed are about more than financial capital. Your network should be leveraged for advice, mentorship, in-kind donations, and more. And the good news is that financial and non-financial resources are not mutually exclusive. Non-financial motivations can encourage investment.

3. Transferring Resources Through Informal Transactions

Not everything needs to be handled with formal contracts. Less formal arrangements for transferring knowledge that rely on trust and mutual understanding are also valuable. For example, mentors don’t need a formal agreement, but should not be discounted.

Read the full article on HBS Working Knowledge.

Posted in: Feature Small, News

Schools: Harvard Business School

About the Author


Kelly Vo  

Kelly Vo is a writer who specializes in covering MBA programs, digital marketing, and topics related to personal development. She has been working in the MBA space for the past four years in research, interview, and writing roles.

One Comment

  1. This is my dream! I think this is the best business school in America. But education there is too expensive …

Leave a Comment

Your email address will not be published. Required fields are marked *

  • Sign Up For Our Newsletter

    Expert admissions advice and the latest news on top business schools delivered straight to your inbox.
  • Join the Clear Admit community for free and conduct unlimited searches of MBA LiveWire, MBA DecisionWire, MBA ApplyWire and the Interview Archive. Register now and you’ll also get 10% off your entire first order.

    Click here to register!

    Already have an account? .

    Log In

    Please enter your Username and Password

    Don’t have an account? Register for free