ICSB and OECD Workshop: Understanding Start-Up Exits: A Pathway to Future Success
On average, more than half of new business start-ups in OECD countries exit the market within five years of incorporation. Start-up exits are often misunderstood as failures; however, there are many kinds of start-up exits, including private acquisitions, public listings (IPO), and voluntary liquidations, not just bankruptcies. Exits can represent success as well as failure. Moreover, failure can result from various chance factors and strategic or operational errors. Even when unsuccessful, exits can be a source of learning for the entrepreneur that can help them re-engage and generate new successful ventures.
Exits can create potential opportunities if policy facilitates the founders’ restarting or investing in other entrepreneurial ventures. To design policy effectively, governments need a better understanding of the nature of start-up exits, what founders do following exit, and the barriers to entrepreneurial recycling.
This workshop, organized by the OECD and the ICSB, addresses these issues by focusing on two distinct types of exits. At one end of the scale, there are rapid-growth scale-ups, or blockbuster entrepreneurs, characterized by the sale of the business by the founder. The exiting entrepreneur can then potentially re-use their experience, networks, and capital in new ventures as serial entrepreneurs, investors, or mentors. Various policies can encourage such recycling, including taxation regimes or matchmaking with new entrepreneurs, investor groups, or other ecosystem actors. At the other end of the scale, there are standard entrepreneurs whose businesses close but may be successful in subsequent entrepreneurial projects. Here, policy can assist in various ways, such as with early intervention or insolvency regimes that help manage the exit in an orderly and timely way and by offering business advice and finance for restart.
Summary Report_Workshop on Start up Exits (24 May)
Speakers and Contributors:
– Ayman El Tarabishy, President & CEO, ICSB, USA
– Jonathan Potter, Head of Entrepreneurship Policy and Analysis Unit, CFE, OECD
– Roberto Crotti, Policy Analyst, Entrepreneurship Policy and Analysis Unit, CFE, OECD
– Ross Brown, Professor, University of St Andrews, UK
– Anna Jenkins, Senior Lecturer, University of Queensland, Australia
– Jonathan Levie, Professor, University of Galway, Ireland
– Winslow Sargeant, Immediate Past Chair, ICSB, USA
Conclusion
The dynamics of start-up exits are complex and multifaceted, encompassing a range of outcomes from private acquisitions to voluntary liquidations. Understanding that exits can signify success and failure is crucial in shaping effective policies supporting entrepreneurs throughout their journey. By recognizing the value of entrepreneurial recycling, we can facilitate the re-engagement of experienced founders, turning past lessons into future successes.
This workshop highlighted the importance of tailored policies to support both rapid growth and standard entrepreneurs. We can enhance the overall entrepreneurial ecosystem by fostering an environment where entrepreneurs can easily restart or invest in new ventures. Through early interventions, appropriate insolvency regimes, and supportive measures for business restarts, we can mitigate the negative impacts of exits and leverage them as opportunities for growth and innovation.
The insights shared by our distinguished speakers provide a comprehensive understanding of start-up exits and underscore the necessity of continued research and policy development in this area. Together, we can create a robust framework that addresses the challenges of start-up exits and maximizes their potential for driving entrepreneurial success.
