Research from NGP Capital uncovers distinguishing traits of successful startup founders.
- Higher education significantly impacts funding success, with PhDs and MBAs leading the way.
- The academic pedigree of founders greatly influences the amount of capital raised.
- Experience in founding or working for consulting firms also boosts funding outcomes.
- International diversity and the number of co-founders play crucial roles in startup funding.
A report by NGP Capital, analysing over 17,000 European tech startups, has shed light on the key characteristics that correlate with successful fundraising. With startups struggling to secure investment, understanding these traits could be crucial for aspiring entrepreneurs.
The study highlights that founders with advanced degrees, such as PhDs and MBAs, tend to raise considerably more funding than those with bachelor’s degrees or no formal education. Specifically, PhD holders raised an average of $34.1 million, while MBA graduates secured $30 million. This is in stark contrast to the $15.2 million raised by those with just a bachelor’s degree and $13.9 million by non-degree holders.
Additionally, the university attended by founders can significantly affect their success. Graduates from top British universities, especially the University of Cambridge, dominate in terms of funds raised, with Cambridge alumni raising $11.2 billion. Other leading institutions include INSEAD in France and the University of Oxford, showcasing the importance of the alma mater in attracting investment.
Experience is another decisive factor, with serial founders or those with previous startup experience raising about 45% more than first-time entrepreneurs. The report also points out that a background in consulting or finance can be particularly advantageous. Former employees from firms like McKinsey, Bain & Company, and Boston Consulting are often more successful in attracting investment.
International diversity within founding teams is also beneficial. Teams with at least one founder from another country raised 33% above the average baseline, indicating the value of diverse perspectives and networks. In contrast, all-local teams raised 13% less than the average.
The optimal structure of funding teams was also examined. Startups with four co-founders reached peak funding, securing an average of $70.5 million, while the amount decreased for teams smaller or larger than this number. Teams of three raised $35.1 million, dual founders $22.9 million, and solo founders brought in $11.9 million.
Despite Silicon Valley’s focus on tech-heavy founders, Europe’s startup ecosystem values academic achievements and a diverse range of skills. This combination fosters innovation and positions teams well for funding success.
Europe’s focus on education and diversity offers a unique landscape for startup funding success.
