Why Do Entrepreneurs Set Up by B-schools Fails !!

March 4, 2010

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Thursday,04 March 2010, 16:32 hrs

Bangalore: Most B-school programs have an extensive emphasis on fundraising, but little understanding of what it takes to get a venture off the ground. As a result, b-schools launch students into the real world with unrealistic expectations, set up to fail, reports Sramana Mitra of Forbes. Last week I launched a discussion on my blog asking my readers in academia to weigh in on teaching bootstrapping in business schools. It generated an active discussion from which I will synthesize a few points.

Robert Hacker is representative of the kind of dismissive attitude prevalent in academia. Hacker says, "I have been teaching entrepreneurship at FIU in Miami for five years. Focus of the course is on building big companies rather than self-employment or family businesses. I generally focus on friends and family as the first round of capital because of the importance of capital raising in most growth businesses. I generally discuss bootstrapping in the context of capital efficiency and certain business models/industries that lend themselves to this approach, such as certain Web businesses with high margins and low start-up costs."Rob Fuller at UC San Diego agrees that bootstrapping is critical. "As a serial entrepreneur who has started a few businesses of my own, and an entrepreneurship educator, I can tell you that I am a firm believer in bootstrapping," he says "Our new venture creation courses in the Entrepreneur Development Program at UC San Diego ALWAYS involve a discussion of bootstrapping. Unless you are a bio tech/hi-tech/clean tech darling with 'many multiples' return potential, VCs won't talk to you. Angels are also particular about their portfolios these days, so if you are not one of the above that pretty much leaves you 3F financing (family, friends & fools) or bootstrapping to launch your new venture."Tim Berry, Founder of Palo Alto Software, and an adjunct faculty at University of Oregon acknowledges: "Yes, I do think bootstrapping is undervalued in business schools, and under-represented in the curriculum, for several reasons: 1) Academic inertia, meaning that business schools teach entrepreneurship as being about developing a business plan and getting financed by investors, and they have for a generation or so (well, at least half a generation) now, and it's hard to change; 2) The visible successes in entrepreneurship, meaning the Googles and s and Apple Computers take the high road, meaning, again, developing a plan, getting financed by professional investors; 3) Bootstrapping is harder to teach, it's a much broader range of possibilities, takes a lot more flexibility and case-by-case thinking. 4) The literature, textbooks and such tend to emphasize the business plan and get investors variety of entrepreneurship."According to Forbes, while the pace of change is slow, many professors of entrepreneurship at a diverse range of business schools have adopted their curriculums to the realities of the modern day world where credit is tight and equity elusive for the early stage entrepreneur.