Portfolio entrepreneurs develop and operate multiple businesses simultaneously, distinguishing themselves from serial entrepreneurs who launch multiple new startups over an extended period.
Capital firms benefit from being long-term entities because it makes acquiring resources when their portfolio firms experience difficulties much more straightforward than for an individual business owner (Huovinen 2008). This allows them to respond more efficiently when faced with market share loss or financial distress.
Definition
Portfolio entrepreneurs operate multiple businesses simultaneously and pursue multiple development paths for each one, which may involve both internal and external growth (start-ups or acquisitions) (Ucbasaran et al. 2003). Previous evidence supports portfolio entrepreneurs operating more successful ventures than serial or novice entrepreneurs (Ucbasaran et al. 2003). This research confirms this trend further.
However, the literature on portfolio entrepreneurs remains sparse and needs further development. This diploma thesis seeks to address this gap by exploring the nature and impact of portfolio entrepreneurs on entrepreneurial performance in typical Western economies. More specifically, this investigation investigates how loose ownership structures of portfolios are justified and managed in pursuit of synergies and redeployment options; additionally, it looks into how entrepreneurs strategically balance risk across linked units within portfolios.
Types
Portfolio entrepreneurs represent a particular class of business owners; their traits and behaviors are explored from theoretical and empirical angles. There have been few studies dedicated to studying them, yet many questions still need answering; thus, this diploma thesis seeks to address them.
Portfolio entrepreneurs differ from serial or novice entrepreneurs by owning and running multiple businesses simultaneously – this form of entrepreneurial activity is classified as habitual entrepreneurship.
This study investigates the experiences of 11 New Zealand portfolio entrepreneurs who have acquired, inherited, or established multiple businesses simultaneously. Data collection relies on extended semi-structured interviews supplemented with field notes and scrutiny of public documents.
Strategies
Portfolio entrepreneurs establish multiple businesses from an early stage. Through internal venturing or acquisitions, their portfolio expands. This business development mode offers an alternative to single-business growth while potentially creating lasting entrepreneurship.
Analyzing eleven New Zealand portfolio entrepreneurs gave us insights into their businesses. They employed an opportunistic growth approach, with acquired businesses remaining independent from core operations rather than merging into one business unit.
Equity partnerships may welcome new partners, provided these newcomers possess the necessary skills, knowledge, and commitment. If not met, this could result in the business being removed from the portfolio entrepreneur’s efforts altogether – leaving him or her free to pursue other endeavors elsewhere.
Risks
Portfolio entrepreneurs tend to engage in excessive multitasking and may lack project management maturity, making timely completion of projects difficult for them.
This study employs a multiple-case approach to explore portfolio entrepreneurship, offering new insights into this business development mode. Our investigation is guided by a theoretical framework that investigates its antecedents (human and social capital endowments, motivation, and risk) before exploring how it manifests in entrepreneurial processes.
Interview data suggests that portfolio entrepreneurs have two strategic development options. Internal development includes investing in or merging businesses within their portfolio; external development may include acquiring another business – often justified as an attempt at improved supply chain integration.
Success
Success factors of portfolio entrepreneurship can vary widely. Balancing time and attention between multiple businesses may prove challenging, so making time for family and friends will help alleviate some of the pressure of managing multiple ventures simultaneously.
The literature surrounding portfolio entrepreneurship is limited, with existing studies mainly focused on novice entrepreneurs with one business. There is an unmet need to uncover how portfolio entrepreneurs acquire and distribute human and financial resources among their related ventures.
This research investigates the why and how of portfolio entrepreneurship. This includes exploring why portfolio entrepreneurs maintain loose ownership-based structures, strategizing and managing related portfolios, and any possible tension between risk diversification and synergy.