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Who are user entrepreneurs?

Christina Hernandez Sherwood, eMed Editor, MedCity News

"User entrepreneurs" have founded more than 46 percent of innovative startups that have lasted five years or more, even though the group only creates 10.7 percent of all U.S. startups, according to a Kauffman Foundation study.

Who Are User Entrepreneurs is the first study to quantify the prevalence and characteristics of user entrepreneurs (who create innovative products or services for their own use, then launch firms to commercialize them). It also compares them with others, including professional-user entrepreneurs (who developed products or services for business use) and end-user entrepreneurs (who developed products or services for personal use).

The following patterns emerged:

  • User entrepreneurship appears to be particularly common among innovative startups, and a high fraction of professional- and end-user entrepreneurs receive venture capital financing. Almost 6 percent of professional-user entrepreneurs across all industries reported receiving venture capital in their first six years of operations.
  • Second, professional-user entrepreneurs seem to possess greater amounts of and richer human capital relative to other types of entrepreneurs. Their firms also seem to prosper with respect to revenue generation and were more common in the high-tech industries.
  • Third, end-user entrepreneurship may be a particularly attractive path for women and some minority groups. Although end-user entrepreneurs do not appear to possess greater human capital compared to other types of entrepreneurs and were different with respect to comparison groups, again a relatively high fraction of these firms reported receiving venture capital financing.

Weekly Wisdom from Kauffman is a regular feature on eMed highlighting insightful research from the Kauffman Foundation. Do you have a favorite Kauffman research insight that could help life science entrepreneurs? Send it to mailto:emededitor@kauffman.org.

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