Impact of human and social capital of startup founders on their ability to raise funds

Abstract

The funding received by startup not only depends on the idea and business model of the startup but also largely on the founder itself. Many investors have gone so far to say that we don't invest in startup but in founder. This study explores the relationship between the founder's human and social capital with the startup's funding. We have analysed 30 founders and through their interviews, coded their personalities. Further, along with these personality scores we took parameters like type of college, previous work experience, past successful startup and followers on social media to explain the difference between the various founders and the difference in funding received by them. Through the analysis, we observed and explained the human and social capital interactions with the founder's personality and its impact on the ability to raise funding. In general a higher level of conscientiousness was associated with increased funding. The founders, with consulting background, commanded higher funding. A similar trend was observed for founders having a Tier 1 college background. Still, it was also observed that if such founders ranked high on conscientiousness and openness to experience, they got lower funding. Founder’s experience of having a successful startup also increased his ability to get better funding. Lastly, the founders having high followers on social media were preferred by investors and so they could generate more increased funding.