Alumni Networks in Entrepreneurial Financing

One in three deals in the early-stage financing market involves an investor and founder from the same alma mater. This research shows 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. Their results are stronger where information about founder abilities is likely less clear.

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