A Three-Part Formula on Fueling Startups

While exploring how a new venture can succeed with their paper “Turning Lead into Gold: How Entrepreneurs Mobilize Resources to Exploit Opportunities”, Bala Vasaa and his co-authors were able to come up with a three-step process to mobilize business resources. Step 1 is to search for resources such as financial capital, human capital and social capital. To do so, entrepreneurs need to identify where to find the resources and this task can be tedious as too many entrepreneurs limit their search on the world they already know. Step 2 is to persuade the ones with the appropriate resources to come on board. Entrepreneurs can access resources in many ways from a successful pitch, to convincing potential employees, to alliances and affiliations with other companies for their social network. To successfully acquire the resources, research shows that a compelling narrative of the startup weights a lot on persuading investors. Lastly, step 3 is to deploy the acquired resources. Entrepreneurs may still face brakes from formal contracts, informal agreements or authorities even after acquiring the resources as they depend on the resource holders. This dependence is good because it favorizes transfer of resources but at the same times, makes the founders sometimes vulnerable.  Read More >>

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