Invisible Capital Creates Entrepreneurial Opportunity

Entrepreneurs who succeed leverage invisible capital to create opportunity. Every business, no matter how small, relies on a set of stake-holders who supply start-up capital, skills, and knowledge. Businesses that survive more than five years are not built by just one person, but by a team of people.

Entrepreneurs tend to bring into their projects people who look like themselves, have the same class status, and have the same type of invisible capital. If you happen to be a high-status, wealthy, college-educated man who has experience in a family business, your tendency to bring others like you to your team will probably be an asset. You have the kind of invisible capital that will instantly create opportunities for you.

Edward comes from a well-to-do family. His parents are doctors, but his uncle runs a small manufacturing business where Edward worked every summer. Edward went to the University of Illinois at Urbana-Champaign, where he joined a fraternity. After he graduated with a degree in mechanical engineering, he developed a new type of refrigerator latch. His uncle helped him manufacture a sample part, and he was able to raise $500,000 in start-up funds from his frat buddies. Edward’s business was positioned to take off.

Edward did not need to understand his invisible capital—for him, the invisibility of his capital made his trajectory seem effortless. When Edward needed to take the next step on his entrepreneurial journey, opportunities appeared. Most people who want to manufacture a part would have a very hard time even figuring out whom to call first. Most people who need to raise $500,000 would not be able to raise that money by making fifteen phone calls. That is what I mean by the playing field not being level.

Disparate outcomes often suggest disparate opportunities.

Carlos comes from a poor family. His first language was Spanish, and his education was poor. He basically had to teach himself English by watching English-language TV. He worked his way through two years of community college, took two years off to work at Radio Shack to save up some money, then was able to get a BA in electrical engineering at the state university. While working at Radio Shack Carlos got an idea for an extension cord that would work better with new digital devices. He has made a prototype himself, but he doesn’t know what his next step would be. Now working as the quality control engineer at the local electric company, Carlos has decided to focus on paying off his debts. He never becomes an entrepreneur.

Carlos has far fewer opportunities than Edward. He has almost none of the invisible capital he needs for the kind of enterprise he imagines. What’s more, Carlos does not know what he lacks. Feeling as if he has hit a brick wall, Carlos gives up on his dream.

Most of us are like Carlos. Our playing field is not level. There’s an old axiom that says, “Luck is when preparation meets opportunity.” Some people come well prepared. The rest of us need to acquire the skills, knowledge, resources, and networks we will need to take advantage of the opportunities that come our way.

Not everyone has the willpower to be an entrepreneur. We know that. What we don’t always recognize is that even if someone has the drive and the will to be an entrepreneur, their lack of invisible capital might prove an impossible barrier. Entrepreneurial success depends upon learning to leverage and develop invisible capital to create opportunity.