The Intangible Capital of Young Serial Entrepreneurs

Abstract: Serial entrepreneurs are talked about in the press, but little is known about the performance of their firms. Until better data becomes available on U.S. firms, we use panel data from Denmark on 216,524 newly founded firms for 2001-2013. Several key results are uncovered. First, when opening his first firm, the serial entrepreneur has higher sales and productivity than the novice, suggesting that the serial entrepreneur has better innate skills and other features, like better access to capital. Second, the serial entrepreneur opens his second firm with much higher productivity and sales than he had obtained when he closed his first firm. This evidence suggests that the serial entrepreneur is learning while running his first firm. His new knowledge – called intangible capital – is built into his second firm when it opens with higher sales. Young people learn the most from running their first firm. The young serial entrepreneurs are learning intangible things used when opening their second firm – such as developing marketing or customer networks – that the older serial entrepreneurs had learned before opening their first business.