Founder Education and Start-Up Funds Raised

Start-ups need investor funding to overcome the early stages of their life, during which they are more vulnerable and exposed to failure. They need to convince investors to fund their business ideas by signaling the potential success of their entrepreneurial venture, through a demonstration of cohesion, shared views, and determination. The educational background of the founders of start-ups can be a strong driver of start-up performance, as it is a visible signal for investors. However, education is composed of two different dimensions (i.e., its depth and its heterogeneity), and their configurations should be carefully considered. To clarify this aspect, in this article, we discuss the impact that these two education dimensions have on funds raised by start-ups in the early stages of their life. Results show that highly educated cofounders have improved access to external funding as long as they do not have highly heterogeneous educational backgrounds; in a parallel fashion, cofounders educated in different disciplines also have improved access to funding, as long as they have less advanced levels of education. These findings are relevant to start-up founders and indicate the best team configurations to guarantee better access to capital in the initial stages of their life.