Why Human Capital Is The Key To Startup Success

Recently I supported the DEX Innovation Centre in Liberec, Czech Republic during a mentor day that involved helping several of their startups from across Europe in their attempts to scale up. The topic of the day revolved around ensuring that you have the right resources to scale, and whilst this often refers to financial resources, the day was devoted primarily to human capital.

As such, it was interesting to read a recent paper from INSEAD and Harvard that explored how founders gain access to the capital (in all its forms) they need to thrive. The paper analyzed around 150 previously published works to try and find clearly defined patterns, and a 3-step process emerged.

1. Search for resources – Whilst this is commonly regarded as financial capital, the analysis found that human capital was much more important. This often meant co-founders or employees, but it also means partners, customers and other stakeholders who can help to grow the startup. Given the complexity of the task, this can often overwhelm entrepreneurs, many of whom may have exceptional technical skills, but lack the network or competencies to even know where to begin. This can often result in entrepreneurs remaining stuck in the world they know rather than venturing outside their comfort zone. Entrepreneurs from privileged backgrounds tend to have a wider social network to tap into, and therefore can easily thrive as a result. If you’re not so lucky, then you have to become an active networker to broaden your social network and gain access to the human resources required to grow.

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