13.4. Growth and Liquidity

Growth of the new enterprise is typically not linear, because there are likely to be continuous challenges for the entrepreneurial team. It is almost a truism to characterize the process of new venture business development in the following ways: 'The only certainty is uncertainty' and 'double the expected time and effort put into the venture, and cut the business plan projections in half, and you will have reality'. From a research standpoint, the gray boundaries of the growth stage of venture development compound the research difficulties. In particular, it is not clear when a fledgling start-up graduates from early stage status and into the growth phase. Should the decision rule be based on employee size, age, or product development, for example? And can we use the selected criteria to meaningfully compare firms across industries? Also, several of the issues associated with maturing firms are covered by other literatures. For example, growth issues start to converge with the strategy literature and some harvesting issues converge with the finance literature.

It is worthwhile to list some of the major entrepreneurial management challenges during the growth phase before discussing some of the associated research issues:

  • meeting projections and milestones;

  • raising additional financing to fund further development (perhaps preparing for a liquidity event);

  • motivating, retaining, and further recruiting managers and scientific employees;

  • refining business and ...

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