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Characteristics that influence new software venture performance / by John Deely.

by Deely, John N.

Computer software industry -- Finance

Venture capital

Entrepreneurship

iii, 135 leaves : ill. ; 29 cm.

Advisor: Kimbel Nap.

Committee members: Dr. Bruce Thompson, Gene Wright.

New software venture performance -- Introduction -- New venture influences -- Related studies -- Research plan -- Results -- Conclusions -- Appendix A) Questionnaires -- B) Web pages.

In recent years, software companies have accounted for the greatest number of small business start-ups among all technology related fields. The industry, in general, is highly fragmented, rapidly changing, and fast growing. As such, it is a highly attractive industry for entrepreneurs, particularly software professionals looking to strike out on their own. The software industry offers many opportunities and thrives on innovation. Its opportunities, however, can be extremely volatile and short-lived. At the onset of this project, the author believes that certain characteristics of a new software venture could minimize the risks in this opportunity-filled, but uncertain, industry. The intent was to perform an academic study of a new software venture performance, modeled after some other general works on new venture performance. The results of the study, then, would identify some key characteristics that can minimize the risk and improve the probability of success of new software ventures. This project first looks at some of the characteristics of the software industry which differentiate new software ventures from new ventures in other industries. Chapter One looks briefly at some software case histories which serve to illustrate some of these characteristics. Some of the characteristics of the software industry identified are rapid change, fragmented markets, low barriers to entry, fast growth opportunities, a unique economy, and a reliance on intellectual capital. The project then reviews pertinent literature with respect to start-up ventures and entrepreneurship. Chapter Two identifies four general classifications of factors that influence new ventures: Business Environment, New Venture Strategy, New Venture Financing, and Entrepreneur Characteristics. Chapter Three takes a look at several research studies related to new venture performance. In particular, three Ph.D. dissertations are reviewed in depth and are used later as a basis for the primary research used in this project.

Each study discussed in Chapter Three provides a Model of New Venture Performance. These models suggest a range of start-up characteristics which can affect new venture performance, as well as appropriate measures of new venture performance. Chapter Four draws on the first three chapters to develop a Model of New Software Venture performance. This model proposes that the performance of a new software venture is related to three general start-up characteristics: New Venture Strategic Planning, New Venture Start-up Financing, and Entrepreneur Characteristics. A questionnaire is then created to gather primary research data from some software start-ups. The administration of the questionnaire is discussed in Chapter Five along with a summary of the data collected and analysis of how it relates to the propositions asserted in Chapter Four. In general, the data indicates that new software venture performance is not closely related to New Venture Strategic Orientation or Entrepreneur Characteristics. The results did, however, confirm the proposition that there is no relationship between New Software Venture Financing and New Software Venture Performance. With the survey data affirming only one of the three propositions presented in the Model of New Software Venture Performance, Chapter Six looks at the implications of the survey results and concludes the following: One unique difference that distinguishes the software industry from other industries is that a software entrepreneur can develop a new product with very little up-front costs. Once that product is ready for market, however, the entrepreneur is faced with the same business constraints and considerations, including strategic planning, marketing and sales, as a new venture in any other industry. The last section of Chapter Six closes with a discussion of the implications of this project for the aspiring software entrepreneur. The most important implication is that, although the software industry offers attractive opportunities for software entrepreneurs, there is no formula that will guarantee success in seizing those opportunities. Starting a new software venture holds the same uncertainty and risk as new ventures in other industries.

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