Alumni Networks in Entrepreneurial Financing

54 Pages Posted: 24 Nov 2021

See all articles by Jon A. Garfinkel

Jon A. Garfinkel

University of Iowa - Tippie College of Business

Erik J. Mayer

Southern Methodist University (SMU) - Finance Department

Emmanuel Yimfor

University of Michigan, Stephen M. Ross School of Business

Date Written: November 15, 2021

Abstract

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

Garfinkel, Jon A. and Mayer, Erik J. and Yimfor, Emmanuel, Alumni Networks in Entrepreneurial Financing (November 15, 2021). SMU Cox School of Business Research Paper No. 21-17, Available at SSRN: https://ssrn.com/abstract=3970128 or http://dx.doi.org/10.2139/ssrn.3970128

Jon A. Garfinkel (Contact Author)

University of Iowa - Tippie College of Business ( email )

108 PBB
Iowa City, IA 52242-1000
United States
319-335-0943 (Phone)
319-335-3690 (Fax)

HOME PAGE: http://www.biz.uiowa.edu/faculty/jgarfinkel

Erik J. Mayer

Southern Methodist University (SMU) - Finance Department ( email )

United States

HOME PAGE: http://www.erikjmayer.com

Emmanuel Yimfor

University of Michigan, Stephen M. Ross School of Business ( email )

701 Tappan Street
Ann Arbor, MI 48109
United States

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