Navigating the volatile world of digital entrepreneurship

Abstract

Having secured venture capital for their startups, digital entrepreneurs face a critical transition to the postinvestment phase. They must evolve new organizational models and demonstrate their capacity to operate in the present while maintaining attention to the future. This transition unfolds in a hyperturbulent context in which rapid growth is crucial owing to competitive advantages from scale and scope. While the present-future tension has received extensive attention in other domains, we know little about how it manifests and affects digital startups transitioning into the postinvestment phase. In this article, we examine entrepreneurs’ challenges during this transition through an action research study of the interactions between a venture capital firm and a set of digital startups. We identify eight salient challenges conceptualized as transition traps, then define and validate tactics for increasing digital startups’ readiness to navigate them. We identify the main transition traps and provide actionable advice for increasing digital startups’ readiness to navigate them.