Chapter 5: Personal Networks, Social Networks and New Firms
_____________________________________________________________ Stinchcomber (1965) argued that firms were created within their unique culturally embedded and historically specific environmental condition. The legendary launch of the US firm Lotus, based on approximately US$5 million of venture capital in 1982, which subsequently enabled the firm to introduce its spreadsheet Lotus 1-2-3 with a massive advertising campaign, was exceptional and without comparison in the Chinese and Irish software industry. Nor was the setting up of its US counterpart Cisco in 1984, 1 where the two founders utilized credit card loans and remortgaged their house in Atherton, California as initial capital and acquired funding from Sequoia Capital in 1987 (after approaching some 75 venture capitalists) 2 common among Chinese and Irish software entrepreneurs. Chinese and Irish software entrepreneurship flourished despite inadequate early funding opportunities. After nearly two decades of development among venture capital firms in Ireland, the Irish software industry still faced a shortage of early stage funding in 2004. Chris Horn of Iona commented that Irish firms were generally ‘not funded adequately, compared to the competition overseas’, which forced many of them to become ‘world class stone squeezers at home, rather than world class businesses’. 3 The founder of the Irish start-up Cinario stated the problem for new firms in this way: ‘Fund managers are under pressure to invest well and it is very hard to raise early stage funding in Ireland. There are a limited number of VC funds who have a mandate to put money into a company of our size’. 4 Nevertheless,...
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