| Investing in start-up ventures is a rewarding but risky proposition. A reduced failure rate is desirable for investors, the economy and society.;This research sought to build theory by developing a robust, theoretically-sound and comprehensive framework of new venture performance. Traditional academic disciplines, viz., Economics, Psychology, Management, etc., and new literature on entrepreneurship was reviewed and augmented with practitioner prescriptions. The resulting model has 101 variables in four dimensions of (i) Individual, (ii) Opportunity, (iii) Resources, and (iv) Venture Plans. The objective of developing a multidimensional scale that measures a higher score with higher performance was satisfied by developing a measurement and scoring method for each of the 101 variables.;The research classified 25 new ventures based in Minneapolis/St. Paul according to this scale. Performance was ranked according to financial criteria relevant for investors and grouped as "Successful" and "Unsuccessful." Information was collected from pre-start up business plans, offering circulars, annual reports and other documents. This data was augmented with an in-depth structured interview of the entrepreneur.;Results indicate statistically significant differences between the scores of the two groups. The dimension of (i) Opportunity and (ii) Venture Plans were significantly related to venture performance while (iii) Individual Characteristics and (iv) Resources were not significant. Since each venture had undergone prior investor scrutiny, the scale can only be applied in the future to ventures that have survived a similar initial scrutiny. The lack of significance denotes either a perfect extraction of information by investors or, more likely, a lack of sharpness of the measuring methods.;This method offers a tool to investors for improving the initial selection of ventures and to focus attention on those areas with high risk of failure. To aid further research, a list is provided of those factors that, as a result of this inquiry, show great promise. The other factors need more development work prior to adaptation. |
