This chapter explores the role of entrepreneurs in the accumulation of wealth and aggregate savings. As the first section of this chapter explains, entrepreneurial wealth creation influences aggregate capital accumulation, savings and wealth inequality. Furthermore, personal wealth influences entrepreneurs' decisions about the types of venture to initiate – and whether any are initiated in the first place.

Although economic research in the last decade has greatly advanced our understanding of entrepreneurial wealth accumulation, several issues remain unresolved. Among these issues is a major puzzle about entrepreneurs' asset portfolio decisions, which Moskowitz and Vissing-Jørgenson (2002) call the ‘private equity premium puzzle’. The essence of this puzzle is that entrepreneurs' private returns are not high enough to fully compensate them for the risk that they bear. In a strictly financial sense, it seems that most entrepreneurs would do better by liquidating their enterprises and investing the proceeds in a balanced portfolio of publicly traded bonds and equities. Similarly, it might be thought that entrepreneurs should reduce ownership stakes in their own ventures and diversify their wealth using the public equity markets. Evidence showing that this strategy is not widely adopted in practice is discussed below, as well as possible reasons for limited entrepreneurial asset diversification.

The first three sections of this chapter treat these issues. These sections are essentially descriptive in nature. Issues with greater conceptual content are explored in the remainder of the chapter, starting with the fourth section, which asks whether individuals need personal wealth in order to enter entrepreneurship.