Are you rich in social capital?

Objectives• Examine social capital in the context of

entrepreneurial behaviors• Explore the impact of social capital on

success as an entrepreneur• Assess your social capital

MacroeconomicChange

Entrepreneurial Motivation

Entrepreneurial Behavior

Confidence

Risk tolerance

Interpersonal skills

Social capital

IndustryCondition

IndustryStatus

Opportunity Identification

ValueCurve

Competition

The Opportunity Analysis CanvasTM

Entrepreneurial Mindset

Take a moment to consider 4 groups1. List up to 5 individuals per group (4) who you would

classify as: – Most trusted friends (trusting)– People with whom you accomplish work with

(working)– Individuals important to a current project or goal

(supporting)– Social circle members (socializing)– Maximum 20 total names across the 4 classes of people.

OK to repeat names in different areas. OK < 5 names.

Fred

Barney

WilmaBetty

Dino

Ex: Trusting(repeat for other 3 groups)

2. Draw lines based who knows one another “well” within each groups

3. For each of the 4 groups, count the number of lines (relationships)

Calculating Density and Effective SizeNetwork (A)

# of people (max 5)

(B)# of

relationships among them (how many

lines did you draw)

(C)Max. # of

relationships = 2*A

(D)Density = (B/C)*100

(E)Redundancy =

(2*B)/A

(F)Effective Size =

A - E

Trusting

Working

Supporting

Socializing

Calculating Density and Effective SizeExample

Network (A)# of

people (max 5)

(B)# of

relationships among them

(C)Max. # of

relationships = 2*A

(D)Density = (B/C)*100

(E)Redundancy =

(2*B)/A

(F)Effective Size =

A - E

Trusting 5 10 10 100 4 1

Working 3 3 3 100 2 1

Supporting 5 2 10 20 0.8 4.2

Socializing 5 1 10 10 0.4 4.6

• Trusting and Working networks are very cohesive. −I can benefit myself and others from expanding this.

• Supporting and Socializing networks are very expansive. −I can benefit myself and others by connecting it.

Analyzing Network CompositionThe more diverse the better for ‘social capital’

• Age: < 5 years, +/- 5 years, or > 5 years• Education: Less, Same, or More• Gender• Ethnicity• Experience: Corporate, Startup,

Government, Education, Non-profit, etc.• Expertise: Business, Engineering, Arts, etc.

Types of capital• Financial capital• Manufactured capital• Human capital• Intellectual capital• Social capital

Defining social capital

“resources available in and through personal and business networks”

• Social in social capital emphasizes that these resources are not personal assets; no single person owns them. – Information, ideas, leads, business opportunities,

financial capital, power and influence, emotional support, even goodwill, trust, and cooperation

• Resources reside in relationships

It’s not only ‘who you know’…• …it’s ‘who you know’ knows• Social capital depends on who you know,

the size, quality, and diversity of your personal and business networks.

• Beyond that, social capital also depends on who you don’t know, if you are indirectly connected to them via your network

Why build social capital?• People with rich social capital are:

– Better informed– More creative– More efficient– Better problem solvers

• With the right networks, people:– Save time because they know where to get the

information they need– Foster cooperation and collaboration– Work smarter

Raising capital through social capital• 75% of new businesses find and secure

financing via their social networks– Capital seekers and providers find each other via

friends, colleagues, acquaintances, and well-connected business associates such as attorneys, insurance agents, and accountants.

• Relationships also play a critical role in financing for “middle market” or midsized firms

Building Entrepreneurial Networks• Use preexisting programs, procedures,

practices, organizations, and structures– Volunteering– Alumni clubs– Professional associations

• Make new programs, procedures, practices, organizations, and structures– Organize activities and events to build your

network

Summary• Social capital is exceptionally valuable• Map and track your network• Keep the friends you have

– Contact information is now easier than ever to catalogue and query

• Be willing to get involved in new things– Volunteer organizations– Alumni clubs– Professional associations