For New Age Founders, Does Going to a Prestigious University Matter?

Year after year, fresh graduates from the world’s top schools enter the real, competitive world. Of them, many are determined to become new-age entrepreneurs who solve local or global problems with innovative solutions. The indoctrinated assumption is that these victories are owed in some way to the prestigious institutions the founders studied at.

But as new-age founders with humble beginnings have jumped into the fray and racked up success after success, it’s worthy to question whether alma mater really does matter. The evidence certainly seems to suggest so.

The Influence on Funding and Exits

Of the 448 firms surveyed during a study, 51% of founders hailed from top-tier universities including the likes of Stanford, Harvard, BITS, and IIT. Granted, the remaining 50% were not Ivy League graduates, but they did have esteemed names on their degree certificates – think St Stephens and National Institutes of Technology. Further, out of the total exits that crossed the USD50M mark, 60% involved founders from elite schools in some capacity [1].

The jury’s out on whether this trend stems from better ideas and value creation from the founder or the school’s influence. The impact of the global perception of the school, too, might sway decisions. In general, however, name drops are associated with higher performances, so there is an underlying advantage in flaunting alma mater ties.

The Advantageous Network of Investors

Alumni networks are especially beneficial to raise funds and co-invest. Many angels and backers focus on university-specific startups to fund during the seed or pre-seed rounds. An example of this is The House Fund, launched by Jeremy Fiance to invest pre-seed cheques into ventures begun by UC Berkeley co-founders or alumni [2]. Similarly, The Oxford Seed Fund aims to invest GBP25k into early-stage ventures that were founded by students, alumni, staff and faculty of the University of Oxford, UK [3]. An alma mater-based platform to invest in startups is an idea that is fast catching on, making high-profile alumni networks all the more crucial.

The Higher Chances of Finding a Like-Minded Co-Founder

Another advantage of alma mater networks is that bonds are forged and networks strengthened in top universities which prove helpful to find startup cofounders. It’s easier to build your A-team from a tight-knit circle of successful graduates, not least because a common background aids collaboration. According to an MIT research paper, the ‘old boys’ network’ is a conducive environment of knowledge and influence that positively impacts the success of a startup. In the words of the study, “the more links founders have with alumni of their university, the more successful their startup is.” [4]

A Counter-Argument: Co-Founders without Elite School Backgrounds

There are outliers to the argument– the new-age founder landscape isn’t any different. Ritesh Agarwal, the founder of the revolutionary OYO Rooms, had dropped out of college to be able to kickstart his venture. As of 2019, the company was valued at $10 billion– second only to PayTM, which is valued at $16 billion [5].

Rahul Yadav, whose brainchild is Housing.com, dropped out of IIT Bombay in his fourth year; Kunal Shah, who brought to life Freecharge alongside his co-founder Sandeep Tandon, also decided against completing his second degree.

The aforementioned names are testament to a certain school of thought, a school which emphasizes that education is only an enabler and not a prerequisite for a successful entrepreneur.

The Final Word

Armed with these examples, one could counter-argue that the alma mater doesn’t have a direct influence on the success of the company. But studies have shown that it has a powerful impact on other crucial factors in building successful startups– funding, talent, and good old word of mouth marketing. In conclusion empirical evidence and various trends suggest that for new-age founders, alma mater definitely matters.

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