Lunch & Learn: The Potential of Failure: Why Failed Start-ups Strengthen Start-up Ecosystems

Around nine out of ten start-ups fail – so goes an often-cited rule of thumb. Yet what looks like a destruction of value from a business perspective is often the exact opposite from the perspective of ecosystem research: The experience, capital and networks of founders whose ventures have failed (or who have successfully exited) flow back into the region – as serial entrepreneurs, business angels, mentors or executives in small and medium-sized enterprises. Research refers to this cycle as ‘entrepreneurial recycling’.

The lecture introduces the concept, which is largely based on Mason & Harrison (2006), and links it to current research findings – such as the phenomenon of ‘boomeranging’, in which founders oscillate between employment and starting their own businesses, thereby continuously feeding knowledge back into the ecosystem.

The centre of this is an empirical study conducted by the lecturer on the role of business angel networks (BANs) in the Bremen/Oldenburg region: BANs act not only as investors but also as institutional catalysts that retain talent, raise the profile of locations and ensure that entrepreneurial failure does not lead to exclusion from the ecosystem – but rather serves as a springboard for the next attempt. Interview excerpts from the Bremen/Oldenburg region illustrate how these mechanisms work in practice.

The talk is aimed at anyone interested in entrepreneurship, the regional economy and innovation ecosystems – and at anyone who wants to understand why a healthy start-up landscape also needs a healthy culture of failure.

Questions the talk will answer

• Why can the sale of a start-up to foreign investors still be a benefit for the region?
• What do failed founders offer that the traditional labour market urgently needs?
• How do business angel networks make a region attractive to ‘bright minds’ beyond its borders?
• Why is ‘boomeranging’ – the cycle of moving between starting a business and working for an employer – not a career setback, but a driving force for innovation ecosystems?
• What can structurally weaker regions do to prevent losing talent to Berlin, Munich and the like?