Alumni Networks in Entrepreneurial Financing
54 Pages Posted: 24 Nov 2021
Date Written: November 15, 2021
One in three deals in the early-stage financing market involves an investor and founder from the same alma mater. We show that founders' connections to early-stage investors through shared education networks are more important than school academic quality or shared geography in facilitating access to funding. Early-stage investors tilt their portfolios toward startups from their alma mater and place larger bets on these firms. Connected investments outperform the same investors' non-connected investments. Our results are stronger where information about founder abilities is likely less clear.
Keywords: Alumni networks, SAT scores, Startup financing, PitchBook, Innovation, Patents, IPOs, Acquisitions
JEL Classification: G23, G32
Suggested Citation: Suggested Citation