Dear Colleagues,
Our next virtual seminar in the Entrepreneurship and Innovation Policy Research series is Wednesday, March 12, from 11:00-12:00 ET. Jean Joohyun Oh (Carnegie Mellon) - will present "The Class Gap in Venture Capital Funding: The Effect of Elite Private High School Education". Abstract is below. Click the link HERE to register for the 3/12 seminar.
We hope you join us!
- Tim Folta (UCONN), Maryann Feldman (ASU), and Supradeep Dutta (Rutgers U)
Abstract: This paper examines the impact of founders' higher social class backgrounds on their likelihood of securing venture capital (VC) funding in the US. Analyzing data from more than 140,000 founders whose startups were founded in 2000-2020, I find that those who graduated from elite private high schools are more likely to raise VC funding. This advantage persists after accounting for gender and race and is partly due to privileged founders' higher likelihood of attending top universities, having more work experiences, and possessing more social connections. I find a similar class advantage among graduates of public high schools with varying neighborhood income levels. Notably, the class advantage is unique to VC funding and does not extend to non-VC funding sources such as crowdfunding, angel investment, accelerators/incubators, and grants, suggesting the influence of demand-side factors such as VC investors' preferences. However, founders' elite backgrounds do not correlate with an increased likelihood of successful exits, calling into question the assumption that VC investors prefer founders from privileged backgrounds due to their higher expected likelihood of success.