Characteristics of high-potential start-ups: some early observations from the CAUSEE project

Abstract

The Comprehensive Australian Study of Entrepreneurial Emergence (CAUSEE) is the largest study of new firm formation ever undertaken in Australia . In a nutshell, CAUSEE aims to uncover the factors that initiate, hinder and facilitate the process of emergence and development of new, independent firms. This is achieved by following the development of two, large samples of early stage business ventures – Nascent Firms; i.e., efforts that are under way but have not yet become operating businesses, and Young Firms, that is, firms that started trading in 2004 or later. Founders of these firms have been taken through a comprehensive telephone interview about the state and development of their start-ups. The project will follow the development of these nascent and young firms over a four year period. CAUSEE is the first large-scale, longitudinal study of emerging businesses in Australia to employ the novel and rigorous methodology of capturing emerging firms and following them over time that was first developed for the Panel Study of Entrepreneurial Dynamics (PSED) in the US (Gartner, Shaver, Carter, & Reynolds, 2004). For more background on CAUSEE, see Davidsson, Steffens, Gordon and Reynolds (2008) and references therein. This report presents some initial analyses that describe the particularly interesting and important minority of ‘high potential’ (HP) start-ups, using the first wave of survey data. We will compare the HP start-ups with a random sample of start-ups that do not fulfil our criteria for being classified as HP. To a lesser extent we will also comment on differences between Nascent and Young HPs. Although some reported findings may have important implications it should be realised that what is presented here represents just an early glimpse of the rich scholarly and practice-orientated output that the project can yield.