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Research Report: The nexus between elite university education and startup funding

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October 18-20, 2023 / Tucson, AZ
The annual summit for research institution gap fund and accelerator programs, including proof of concept programs, startup accelerators, and university venture funds

The Story

The dynamic startup ecosystem of Southeast Asia has been witnessing remarkable growth, attracting a surge of entrepreneurs, investors, and accelerators. Among the crucial determinants of startup success lies the ability to secure venture capital investment, making startup funding an integral component of entrepreneurial endeavours.

While various factors influence the likelihood of securing funding, the role of founders’ educational background remains largely anecdotal. Most people in the startup space will intuitively say that founders who went to an elite global university are much more likely to get funding or receive funding. Quantitatively, this has never been shown, at least for startups in Southeast Asia, until now.

My colleagues and I have recently published a new research report that looks to answer precisely this question: In From Degrees to Dollars: Exploring the Link Between Elite Education and Startup Funding, we ask whether startup founders from Southeast Asia who attended a world-class elite university raise more from VCs than founders who didn’t.

We built a dataset that consisted of nearly 800 startups headquartered in Southeast Asia and which had raised funding after 2017.  We meticulously collected information on the educational backgrounds (undergraduate and postgraduate) of the Founders and ranked the universities according to the USNews ranking for the 2022/2023 academic year.

The relation between elite education and fundraising 

The findings of our research unveil a significant and positive relationship between attending elite universities and the number of funds raised by startups in Southeast Asia, validating the intuitions held by many in the startup space.

However, this correlation predominantly manifested during the later fundraising stages, specifically when founders pursued their postgraduate studies at these prestigious institutions. In other words, graduating from a renowned institution like Harvard was associated with increased funding during Series C and beyond, but only if the founder pursued postgraduate education there.

Also Read: Skyrocketing Startup Funding in APAC: Unveiling the Success Factors

This phenomenon can be attributed to several factors.

Firstly, a degree from a top school, such as an MBA or a PhD in sciences, signals a certain level of business acumen or specialised expertise, which can provide an edge over other founders.

Secondly, founders with prestigious postgraduate education often benefit from an extensive network of alumni, mentors, and industry professionals, enabling them to establish valuable connections with potential investors and strategic partners. These connections prove invaluable in securing larger funding rounds and establishing credibility within the dynamic startup ecosystem.

Interestingly, our study did not identify a significant correlation between educational background and funding during the seed stage. Most seed-stage startups raised comparable amounts, regardless of their founders’ educational backgrounds.

However, it is worth noting that graduating from an elite institution may increase the likelihood of receiving funding at the seed stage, acting as a foot in the door. Some venture capitalists explicitly target founders with an elite educational background, indicating that perceptions of certain skills or network advantages may be associated with attending renowned institutions.

Nonetheless, due to the limitations of our dataset, we cannot directly compare the number of startups that secured funding to those that did not.

In conclusion

Our research underscores the importance of postgraduate education from prestigious universities during the later stages of fundraising for startups in Southeast Asia. However, the limited correlation between educational background and funding at the seed stage suggests that seed-stage investors prioritise factors beyond academic credentials.

Nevertheless, founders who lack key leadership members with postgraduate pedigrees may benefit from strategically augmenting their teams with individuals possessing strong educational backgrounds from elite institutions. This approach can enhance their prospects for securing funding during later stages, fostering long-term growth and success.

Furthermore, these individuals can contribute valuable skills, expertise, and network connections, which significantly benefit the startup’s fundraising efforts and overall trajectory. By leveraging these insights, startups can navigate the intricacies of the funding landscape and position themselves for sustainable growth in the dynamic startup ecosystem of Southeast Asia.


Full story: New research report: The nexus between elite university education and startup funding | e27

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