Everywhere you look there are fresh-faced entrepreneurs who have seemingly graduated from college, come up with an idea, and become billionaires overnight.
The most famous of these is Evan Spiegel, the founder of Snapchat. At the tender age of 25, he’s worth $1.5 billion and remains the company’s CEO. This has prompted numerous media publications to ask what it is about people like Spiegel that makes them so successful. Entrepreneur, for example, highlight the importance of ‘getting to know your customers’ and ‘projecting a positive business image’. Yet whilst these attributes are unlikely to do anyone any harm, how many entrepreneurs can truly claim to have ‘a rags-to-riches’ story? According to Quartz, decidedly few.
There are, of course, exceptions. Starbucks’ CEO, Howard Schultz - who took over the company’s reigns in 1987 when they had just 60 coffee shops - grew up on a housing complex. Arguably the U.S’s most iconic fashion designer, Ralph Lauren, worked as a clerk at Brooks Brothers after leaving the army. Most, however, fail with their business idea, not because they lack the creativity or ‘get-go’ to be successful, but because they don’t have access to the required capital to get their idea off the ground.
On average it costs $30,000 to start a business. In a survey on EY, 33% of people felt that funding was the biggest challenge they faced, with investors still primarily risk adverse, especially when an idea is slightly left of field.
Because funding is at the forefront of most entrepreneurs’ minds early on, it can cause them to lose sight of their original idea. They also might try and adapt their concept so that it’s more investor-friendly, making it more anodyne in the process. If entrepreneurs have a safety net - perhaps through wealthy parents or an extensive network - it gives them the platform to take risks, one of the most important attributes for any entrepreneurs who’s made it big.
A recent Global Entrepreneurship Monitor report identified that 80% of all new business funding comes from either personal savings or friends and family. As an entrepreneur, your network can make or break you, and is another reason why coming from money can give you a leg-up. Wealthy parents tend to send their children to the best schools. Being surrounded by equally, or more wealthy people, gives you options and increases the chances of finding a business partner who’s willing to invest capital in a risky venture.
In an article in Quartz, it states that ‘following your dreams is dangerous’. Whether the notion that anyone can make it is actually true remains a mystery. The best entrepreneurs undeniably have characteristics that make them special - after all you can’t turn $30,000 into £1 billion just because you went to a certain college or were funded by your parents - but privilege plays a role.
The advent of crowdfunding sites such as Kickstarter offer a new avenue for funding, but it’s still likely that the most successful will need help from their friends and family when starting out.