In this new age of innovation, it seems like everyone is launching a startup and vying to be the next big thing. While some make it, the majority don’t.
This often leads us to wonder what an Evan Spiegel or a Mark Zuckerberg have that we don’t. We might go insofar as to ask what innate characteristics successful entrepreneur share.
Now that more business students are opting for the startup life over Wall Street, it’s not a bad question to ask. Whatever genetic predisposition we think these people might have, Quartz reminds us that the most common trait among entrepreneurs is access to financial capital.
Access to capital, whether it is in the form of family riches, a sizable inheritance or a name that lands you connections, allows entrepreneurs to assume risks they might not normally take. It’s a crucial advantage because when people’s basic needs (e.g. food, shelter, water) are met, they are able to focus on more creative projects and ideas.
Professor Andrew Oswald of the University of Warwick told Quartz:
“Many other researchers have replicated the finding that entrepreneurship is more about cash than dash.
“Genes probably matter, as in most things in life, but not much.”
Economists at the University of California examined common traits of entrepreneurs in a 2013 paper and discovered that a large number of them were white, male and highly educated. Economist Ross Levine elaborated:
“If one does not have money in the form of a family with money, the chances of becoming an entrepreneur drop quite a bit.”
Contrary to the myth that genetics predisposes individuals to be entrepreneurs, recent research from the National Bureau of Economic Research analyzed risk-taking behavior in the stock market and found that environment most influenced our decision-making. In other words, it is nurture, and not nature, that conditions risk tolerance over time.
Starting a venture is a privilege most don’t have since many startups go the first few years without incoming revenue. According to the Kauffman Foundation, launching a startup costs an average of $30,000 and many founders aren’t paid a salary initially. While you may think most funding comes from angel investors, data from the Global Entrepreneurship Monitor shows that over 80% of funding for new businesses are derived from personal savings, family and friends.
So while many successful and talented entrepreneurs work extremely hard to launch their startups, keep in mind that privilege is often an understated ingredient that’s key to success.