So, what is entrepreneurship? The answer depends on who you ask. As a professor in the business administration department at Harvard Business School, I often hear professors who believe that entrepreneurship is something separate from business itself. It is not as if these people are not interested in the subject. Indeed, they are typically those who have spent more time observing small enterprise in the real world than those who have little to no experience in entrepreneurship.
As a scholar, imagine a theoretical entrepreneur term. Imagine a professor who uses the same entrepreneurial term as another colleague, but adds the word “venture” to it. Now, the phrase “venture capital-backed startup” would sound like a very general description of businesses with venture capitalists backing them. For many professors, however, the term “venture capital-backed startup” is still too vague to describe all the small businesses with venture capitalists backing them.
Still, for some of those students who have spent their time observing entrepreneurs, the definition of a small business is quite different than for others. If a student were to ask me what is entrepreneurship, they might get a response like this: a business, when funded by a venture capitalist, has the potential to become an enterprise, or a large business with a sizable share of the market.
However, what is entrepreneurship really about? Why does a venture capitalist to provide capital to companies? Well, there are actually several factors involved. But the common denominator is that the venture capitalist wants to see the company succeed.
It is very difficult for a venture capitalist to make money on a business that has no chance of ever succeeding. If a business is in debt, will it eventually be unable to pay its debts? What if the business cannot produce products or services that are of value to the venture capitalist?
To be successful, a venture capitalist needs to see a clear path for the company and a strong business plan. There should also be some form of business plan that describes how the venture capitalist plans to market and distribute the profits.
In other words, if a business model has too many obstacles to overcome, then it should not be considered a small business in the first place. The business model should be eliminated or the venture capitalist should be willing to take risks with an unproven business model. As a student in business, a good example would be an oil-drilling business that uses horizontal drilling rigs to extract oil. It does not require much technology to set up and operate such a business. However, if there are a lot of unknowns and no real evidence of success, it should be eliminated because the venture capitalist wants the venture to fail.
What is entrepreneurship really about, however, is the definition of the terms business and entrepreneur. Entrepreneurship is a broad term that can include some or all of the following: business incubators, co-ops, start-up companies, cooperatives, ownership models, government grants, venture capital funds, and private equity investments. When you start to research what is entrepreneurship, look for the words “venture”capital.”
Venture Capitalists is private investors who provide venture capital funds for new businesses. These are usually companies that have not been around for too long and have no track record, but they may be promising in the future. Typically, the venture capitalists will provide cash to start-ups for three to five years in order for the business to grow and be profitable before being re-invested.
Many venture capitalists want a complete control of the company as soon as it is founded. Other venture capitalists prefer to see the business being run by an individual until it is profitable. Others prefer to see the business being run by a limited liability company. Although this business model can be harder to find, you will more likely get an investor if it is run by an LLC or S-Corp.
Entrepreneurial activities are typically not covered in schools. Students need to understand entrepreneurship and all of its components. They should learn that it is possible to become wealthy without having to invest money or risk their own personal assets.
So, what is entrepreneurship? It is really a process of finding out what the business offers and finding a market that is in need of the product or service. Then you can use your knowledge of economics, marketing, management, and business models to create the products or services to fill that need. When these are successfully done, the business can then provide a return on your investment and be successful.