E e e , C aig R.
A icle
Does mo e educa ion lead o be e s a up unding
ou comes?
Cogen Economics & Finance
P o ided in Coope a ion wi h:
Taylo & F ancis G oup
Sugges ed Ci a ion: E e e , C aig R. (2024) : Does mo e educa ion lead o be e s a up unding
ou comes?, Cogen Economics & Finance, ISSN 2332-2039, Taylo & F ancis, Abingdon, Vol. 12, Iss.
1, pp. 1-9,
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Does mo e educa ion lead o be e s a up
unding ou comes?
C aig R. E e e
To ci e his a icle: C aig R. E e e (2024) Does mo e educa ion lead o be e
s a up unding ou comes?, Cogen Economics & Finance, 12:1, 2354281, DOI:
10.1080/23322039.2024.2354281
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FINANCIAL ECONOMICS|RESEARCH ARTICLE
Does mo e educa ion lead o be e s a up unding ou comes?
C aig R. E e e
Peppe dine G aziadio Business School, Malibu, CA, USA
ABSTRACT
Much o he ex an esea ch on he ela ionship be ween ounde educa ion le el and
en ep eneu ial success inds ha mo e educa ion is associa ed wi h inc eased suc-
cess. Using a unique da a se o s a ups om a la ge s a up compe i ion, his pape
speci ically explo es unding success and empi ically con i ms ha mo e educa ion is
associa ed wi h an inc eased likelihood o unding. Addi ionally, we also ind a nega-
i e cu ilinea aspec o ha ela ionship, meaning ha al hough educa ion gene ally
imp o es unding, oo much educa ion may ac ually impai unding ou comes.
IMPACT STATEMENT
Po ayals o s a up ounde s in en e ainmen media o en show sc appy uni e si y
d opou s ba ling o ge unding - and hen inally b inging hei new p oduc suc-
cess ully o ma ke . This a icle asks and answe s he ques ion as o whe he o no
his an i-educa ion scena io is uly he no m. Is highe educa ion help ul o no in
ge ing unded? Using da a om a la ge s a up compe i ion, whe e some s a ups
ul ima ely ge unded and o he s do no , we ha e he equi ed ea men and con ol
g oups o be able o shed ligh on ha esea ch ques ion. A p ima y impac o his
pape is ha i shows academics, ounde s and in es o s ha educa ion le el is a
posi i e ac o in ge ing unded. A seconda y impac is ha he e appea s o be a
nega i e cu ilinea ela ionship be ween yea s o educa ion and unding success. This
means ha he e may be an op imal le el o educa ion a e which addi ional educa-
ion no longe helps a ac p o essional in es o s, bu may ac ually begin o be an
impedimen .
ARTICLE HISTORY
Recei ed 7 No embe 2023
Re ised 22 Ap il 2024
Accep ed 4 May 2024
KEYWORDS
S a ups; educa ion; en u e
capi al; human capi al;
en ep eneu ial inance;
angel in es ing
JEL CODES
M13; J24; G24; L26
REVIEWING EDITOR
D . Da id McMillan,
Uni e si y o S i ling, Uni ed
Kingdom o G ea B i ain
and No he n I eland
SUBJECTS
Co po a e Finance;
En ep eneu ial Finance;
En ep eneu ship and Small
Business Managemen
1. In oduc ion
Does mo e educa ion lead o be e s a up unding ou comes? The answe o his ques ion depends on
in es o s’opinions and expe ience abou whe he he possession o an ad anced deg ee helps o hin-
de s ounde success. This pape explo es he ela ionship be ween he educa ional le el o he ounde
and s a up unding, ex ending he esea ch om a a ie y o disciplines, including: inance, economics,
en ep eneu ship, and managemen .
Al hough he e has been p e ious esea ch ha s udies ounde educa ion, he e has been ela i ely li -
le ha add esses i s e ec on he bina y ou come o unding success. The ex an esea ch ei he ocuses
on educa ional e ec on s a up alua ion (Hsu, 2007), o s a up success (Eesley & Robe s, 2012). The lim-
i ed esea ch on educa ion and unding uses deal da a o look a he associa ion o educa ion on unding
le els, a he han he bina y ac o unding/no- unding. The e is a o m o su i o ship bias inhe en in
ha kind o s udy, since he obse a ions do no gene ally include ejec ed deals (Pinelli e al., 2022).
1.1. Li e a u e e iew
Signaling heo y, as ou lined by Connelly e al. (2011), is o en e e enced in he con ex o s a up und-
ing. Highe educa ional quali ica ions can se e as a posi i e signal o in es o s, educing in o ma ion
CONTACT C aig R. E e e [email p o ec ed] Peppe dine G aziadio Business School, Malibu, Cali o nia, USA.
ß2024 The Au ho (s). Published by In o ma UK Limi ed, ading as Taylo & F ancis G oup
This is an Open Access a icle dis ibu ed unde he e ms o he C ea i e Commons A ibu ion License (h p://c ea i ecommons.o g/licenses/by/4.0/), which
pe mi s un es ic ed use, dis ibu ion, and ep oduc ion in any medium, p o ided he o iginal wo k is p ope ly ci ed. The e ms on which his a icle has been
published allow he pos ing o he Accep ed Manusc ip in a eposi o y by he au ho (s) o wi h hei consen .
COGENT ECONOMICS & FINANCE
2024, VOL. 12, NO. 1, 2354281
h ps://doi.o g/10.1080/23322039.2024.2354281
asymme y, and hence po en ially in luencing unding decisions. I a ounde is highly educa ed, pa icu-
la ly a p es igious/selec i e ins i u ions, hen he e is a ce i ica ion e ec ha implies ha he ounde
mus also be o high quali y. This is an example o in es o s be ing on he jockey s. he ho se, whe e
he jockey is he ounde and he ho se is he s a up.
Kaplan e al. (2009) ind e idence ha in es o s mo e hea ily conside he jockey ( ounde ) when
making he decision abou p oceeding o due diligence, bu du ing he due diligence phase i sel , hey
emphasize he ho se (s a up).
In e ms o jockey s. ho se, since ou s udy is abou ounde educa ion, we a e ocused p ima y
upon he jockey’s impac on unding success.
The e a e nume ous s udies ha sugges a posi i e co ela ion be ween ounde educa ion le el and
s a up unding. B ush e al. (2001) no e ha Palm ounde Je Hawkins’imp essi e educa ion in
Neu obiology was a signi ican ac o in he posi i e decision by ea ly in es o s. His educa ion was pe -
cei ed as a signi ican ac o in bo h his echnical abili y as well as his epu a ion. Tha pape , al hough
suppo i e o ou conclusion, is p ima ily anecdo al and he e o e has limi ed empi ical e idence.
Ås eb o and Be nha d (2005) ind ha human capi al componen s such as educa ion and expe ience
ha e a posi i e impac on o e coming he c edi cons ain o s a ups, bu ha he e ec o educa ion
on loan app o als is non-linea . The bene i o educa ion is educed as he ounde achie es highe
deg ees. Thei s udy is highly ele an o ou s, since hey ind ha educa ion is posi i ely associa ed
wi h unding success. Howe e , since hei unding measu e is deb a he han equi y, hei conclusions
canno speak o equi y in es men , which is he p edominan o m o s a up unding. Lende s a e
unde s ood o be gene ally much mo e isk a e se han equi y in es o s.
Pinelli e al. (2022) pu sue he concep s o cogni i e igidi y and cogni i e dis ance c ea ed by he
educa ional le els and educa ional he e ogenei y ( a ie y o disciplines) among he ounding eam. They
ind ha bo h educa ion le el and educa ion he e ogenei y a e posi i ely associa ed wi h unding le el
when conside ed independen ly, bu he p esence o bo h mode a es ha associa ion. Since he
dependen a iable in hei s udy is unding le el, a he han unding success, hei s udy suppo s ou
conclusions bu does no exac ly answe ou esea ch ques ion.
Shane (2003) a gues ha he ela ionship be ween ounde educa ion and s a up unding migh be
in luenced by a ious o he ac o s. Fo example, he sec o o he s a up, cul u al con ex , and he spe-
ci ic o m o unding (angel in es o s, en u e capi al, e c.) may signi ican ly media e his ela ionship.
Ou s udy acknowledges hese a ious o he ac o s h ough ou explana o y and con ol a iables.
Eesley and Robe s (2012) use educa ion le el as a p oxy o ounde alen and ind a posi i e and s a is-
ically signi ican ela ionship be ween educa ion and en ep eneu ial success. In hei a icle, hey a emp
o delinea e he de e minan s o success (measu ed by log e enue) be ween alen and expe ience. They
ind ha bo h a e impo an o success, while no being co ela ed wi h each o he . Thei indings a e indi -
ec ly suppo i e o ou esul s, al hough ou dependen a iable is no qui e he same. They use he log o
e enue as a p oxy o s a up success, whe eas ou s udy is abou unding success. Al hough unding
should be co ela ed wi h e enue (e en ually), i is ce ainly he case ha no all s a ups succeed which
ha e been unded. Also, he e may be an issue wi h endogenei y in hei explana o y a iables o alen
and expe ience. In ui i ely, expe ience should add o alen , bu he ac ha he au ho s do no ind a co -
ela ion be ween expe ience and alen sugges s ha pe haps educa ion is no he bes p oxy o alen .
O en educa ion and expe ience, especially o young ounde s, a e di ec adeo s. Any yea s dedica ed o
addi ional educa ion a e, necessa ily, yea s aken away om expe ience.
A s udy by Hsu (2007) ound ha ounde educa ion is posi i ely co ela ed wi h p e-money alu-
a ion. Using OLS eg ession on su ey da a wi h 149 obse a ions, he au ho inds ha ha ing an MBA
deg ee is posi i ely associa ed (and signi ican ) wi h alua ion. A PhD is also signi ican , bu only when
in e ac ed wi h an in e ne sec o dummy a iable. The au ho a ibu es his o a signaling e ec o
in es o s. The Hsu (2007) app oach is di ec ly applicable o ou esea ch ques ion, as long as le el o
alua ion is highly co ela ed wi h he in es o s’ unding decision (i.e. he in es o s belie e ha he
equi y o e is unde alued).
In hei s udy o digi al s a ups in India, Nigam e al. (2020) do no look a he impac o educa ion
le el on unding, bu a he whe he o no he ounde was g adua ed om an eli e s. non-eli e ins i-
u ion. They conside his as a signaling e ec ega ding he quali y o he ounde and hey indeed ind
2 C. R. EVERETT
a posi i e e ec on unding success. Thus, he p ima y hypo hesis o his a icle is ha ounde educa-
ion le el and unding a e posi i ely ela ed. Al hough hei s udy is somewha ela ed o ou s, he sig-
ni ican di e ence is ha because hey a e speci ically looking a eli e e sus non-eli e educa ional
ins i u ions, hei hypo hesis is based on he ne wo k e ec o he ounde s’educa ion. Ou pape , on
he o he hand, is mo e conce ned wi h le el o educa ion and how i migh add o he ounde s’skill
le el ( eal o pe cei ed).
1.2. Hypo hesis de elopmen
The i s hypo hesis is no no el, bu a he a con i ma ion o esul s om p e ious s udies. Namely, ha
ou unique da a se also shows ha highe ounde educa ion le els a e posi i ely associa ed wi h
s a up ou comes. A posi i e ela ionship be ween educa ion and unding will lend c edence ha his
new da a se may be ep esen a i e o he popula ion.
Hypo hesis 1: The highe educa ion le el o he ounde , he mo e likely he s a up will ecei e ou side
unding.
The majo con ibu ion o his a icle is ha , due o a possible pe cep ion by in es o s ha he high-
es le els o educa ion lead o cogni i e igidi y, educa ion may ha e diminishing e u ns. Thus we
should see a nega i e cu ilinea ela ionship be ween educa ion and unding. Ou heo y is ha en-
u e capi al in es o s may pe cei e ha ounde s ha a e oo highly educa ed (e.g. doc o a e le el) may
be oo cogni i ely igid o ake counsel om he in es o s, when, o example, a pi o is equi ed. This
would be consis en wi h social cons uc i is heo y ha sugges s ha p olonged imme sion in a pa -
icula en i onmen o in ellec ual in luences ends o ein o ce a pe son’s men al models and conse-
quen ly “ eeze” hei cogni i e maps (Ma ch, 1991; Leona d-Ba on, 1992; Fiol e al., 1985; Lei e al.,
1996). I a en u e capi al in es o wo ies ha a PhD ounde could be s uck in a ce ain way o hink-
ing due o hei educa ion, hen high le els o educa ion could inhibi in es men . This leads o he
second hypo hesis.
Hypo hesis 2: The o e all posi i e ela ionship be ween educa ion and unding is nega i ely cu ilinea .
This pape uses a no el and unique da a se om he 2019 Peppe dine G aziadio Business School’s
Mos Fundable Companies (MFC) compe i ion. MFC is no a pi ch compe i ion, bu a he a ligh due
diligence compe i ion. Thus, a g ea deal o use ul in o ma ion is ga he ed abou each company. The
only equi emen s o en y in o he compe i ion a e ha he s a up is based in he Uni ed S a es and
has less han en million USD in annual e enue.
We ack he esul s o hese companies s a ing in 2019 o e he nex h ee yea s. Using a c oss-
sec ional p obi app oach, We indeed ind ha educa ion le el is posi i ely associa ed wi h unding ou -
comes, consis en wi h much o he ex an li e a u e ha add esses unding le els. Howe e , we also
ind a nega i e cu ilinea shape o his ela ionship, meaning ha he e may be a poin whe e add-
i ional educa ion does mo e ha m han good in a ac ing in es o s.
The p ima y con ibu ion o his pape is ha , a he han looking a success ul deals o gain insigh
in o he associa ion be ween educa ion le el and unding le el, we look a a popula ion o s a ups o
which we had no idea, a p io i, whe he o no hey would be unded. Thus, his pape gi es unique
insigh in o he eal wo ld o he de e minan s o s a up unding - a wo ld whe e mos s a ups ail o
ob ain ou side in es men . A seconda y con ibu ion o his a icle is con i ma ion ha he ela ionship
be ween ounde educa ion le el and equi y unding success is no linea , bu a he shows e idence o
he exis ence o an op imal le el o educa ion. P e iously, his e ec had only been shown wi h deb
unding (Ås eb o & Be nha d , 2005).
2. Ma e ials and me hods
2.1. Sample and p ocedu es
Ou baseline da a abou s a ups and ounde s comes om he 2019 Peppe dine G aziadio Mos
Fundable Companies compe i ion (MFC). S a ups compe e e e y yea in hopes o being named one o
COGENT ECONOMICS & FINANCE 3
he 15–20 annual “mos undable companies.”S a ups om all i y U.S. s a es pa icipa e. Fo he pu -
poses o his esea ch, we sen ou a ollow-up su ey h ee yea s la e (2022) o he ounde s ha com-
ple ed he main phase o he compe i ion asking o he cu en s a us o hei s a up and any unding
ac i i ies ha had occu ed du ing hose in e ening yea s.
The h ee-yea e m o he s udy is admi edly limi ing. I he a icle had been s udying i m ou -
comes, such as acquisi ion o success ul exi , h ee yea s would no ha e been enough ime o anspi e
in o de o iden i y ends. Bu his a icle is only looking a unding a he ou come. All s a ups pa ici-
pa ing in he compe i ion we e ac i ely seeking unding. Al hough he e may be ins ances o some o
hese s a ups ge ing hei i s p o essional unding ou side ha h ee-yea window, we can easonably
assume ha a e h ee yea s o unsuccess ully pu suing ou side in es men , mos ounde s will ei he
close he business o con inue he business on a smalle scale.
The MFC da a se is essen ially su ey da a, which has he po en ial o bias. Founde s olun a ily pa -
icipa e in he compe i ion, which begs he ques ion o whe he o no ou su ey sample is ep esen a-
i e o he s a up popula ion as a whole. This po en ial o bias is a known limi a ion o his s udy. I
should be no ed, howe e , ha i is no eadily appa en wha he di ec ion o he bias, i any, would
be. I is no ob ious whe he he ounde s who pa icipa e in he MFC compe i ion a e mo e likely o be
unded, o less likely o be unded, han he ounde popula ion as a whole.
The e we e a o al o se en y- wo (72) su ey esponses. The summa y s a is ics and co ela ions a e
epo ed in Table 1. Fi een o he s a ups we e able o ecei e p o essional unding, which we de ine
as unding om in es o s ha ypically ha e some so o due diligence p ocess. This is he dependen
a iable in ou analysis. Due o he sample size and he Boolean na u e o he dependen a iable, p o-
bi analysis was he app op ia e ool o ou s udy.
2.2. Measu es
The ollowing is a desc ip ion o he dependen and explana o y a iables o his s udy:
unded is a Boolean dependen a iable ha akes a alue o one i he s a up has ecei ed p o essional
unding and ze o i i has no . P o essional unding is de ined as coming om a sou ce ha ypically
has a obus due diligence p ocess, which o he pu poses o his a icle a e: en u e capi al, angel
in es men , p i a e equi y, g an s and bank loans. This a iable akes a alue o ze o i no unding has
occu ed, o he unding comes om iends & amily o c owd unding (i.e. we exclude iends & amily
and c owd unding as p o essional unding sou ces since hose unding sou ces a e likely o be mo e
in luenced by loyal y and emo ion han by due diligence).
ed y s is an in ege explana o y a iable ha akes a alue be ween ze o and eigh , ep esen ing he
numbe o yea s o ounde educa ion beyond high school. A high school diploma (o less) is coded as
ze o, some college is one, associa e’s deg ee is wo, bachelo ’s deg ee is ou , mas e ’s deg ee is six,
and a doc o a e is eigh .
ed y s sq is an in ege explana o y a iable ha is he squa e o ed y s.
ounde age is an in ege explana o y a iable ha is he ounde ’s age as o 2019.
c-co p is a Boolean explana o y a iable ha is coded as one i he s a up is o ganized as a C- co po -
a ion and coded as ze o o he wise.
Table 1. Summa y s a is ics and co ela ions.
Va iable M SD 1 23456789
1. unded 0.208 0.489 1.000
2. ed y s 4.806 2.218 −0.017 1.000
3. ed y s sq 27.944 19.593 −0.095 0.963 1.000
4. ounde age 48.264 12.879 −0.216 −0.055 −0.013 1.000
5. c-co p 0.444 0.500 0.229 0.104 0.074 −0.093 1.000
6. e enue 0.514 0.503 0.020 0.040 −0.050 −0.076 −0.081 1.000
7. pa en s iled 1.736 5.528 0.131 0.196 0.237 0.042 −0.089 0.085 1.000
8. bod mb s 0.986 1.614 0.431 −0.064 −0.049 0.044 0.426 0.061 0.273 1.000
9. pa en bod 4.111 16.531 0.115 0.146 0.190 0.023 −0.062 0.137 0.953 0.382 1.000
4 C. R. EVERETT
e enue is a Boolean explana o y a iable ha is coded as one i he s a up has any amoun o
e enue.
pa en s iled is an in ege explana o y a iable ha ep esen s he numbe o pa en applica ions iled
as o 2019.
bod mb s is an in ege explana o y a iable ha ep esen s he o al numbe o membe s o he s a -
up’s boa d o di ec o s as o 2019.
pa en 3bod is an in ege in e ac ion a iable calcula ed as pa en s iled imes bod mb s.
2.3. Desc ip i e s a is ics
Table 1 con ains he mean and s anda d de ia ion o each o hese a iables, as well as he co ela ions
be ween each o he a iables. No ewo hy esul s om Table 1 include he ac ha he mean yea s o
educa ion beyond high school in he sample is 4.8 yea s, he a e age age o he ounde s is 48, and
abou hal o he s a ups ha e e enue.
Figu e 1 shows he dis ibu ion o unding success wi h espec o educa ion yea s. I clea ly shows
ha mo e o he success ully unded s a ups ha e mo e highly educa ed ounde s.
3. Resul s
We pe o med ou p obi analyses wi h unded as he dependen Boolean a iable and he esul s a e
p esen ed in Table 2. In o de o es ou hypo hesis a he mos basic le el, he i s model, Model (1),
looks only a yea s o educa ion beyond high school (and yea s squa ed) as he explana o y a iable
wi h no o he con ol a iables. We indeed ind a posi i e o e all ela ionship be ween educa ion le el
and unding wi h a nega i ely cu ilinea shape. The coe icien s o bo h ed y s and ed y s sq a e signi i-
can a he 5% le el, consis en wi h ou hypo hesis.
Table 2. De e minan s o p o essional unding o s a ups.
Va iable (1) (2) (3) (4)
ed y s 1.0028 1.0366 2.4158
ed y s sq −0.1217
−0.1260
−0.2811
ounde age −0.0267
−0.0624
c-co p 0.1733 −0.0995
e enue 0.0846 −0.1877
pa en s iled 0.20070.2537
bod mb s 0.4325 0.7466
pa en x bod −0.0693
−0.0709
cons an −2.3947
−1.2129 −1.5873
−3.4078
Pseudo-R
2
0.1104 0.1519 0.2184 0.5075
No e. Each o he ou models a e p obi models wi h p o essional in es o unding as he Boolean dependen a iable. *, **, and *** indi-
ca e ha he coe icien s a e s a is ically signi ican ly di e en om ze o (based on p- alues) a he 10, 5, and 1% le el, espec i ely.
Figu e 1. Dis ibu ion o unding successes ac oss educa ion yea s beyond high school.
COGENT ECONOMICS & FINANCE 5
The o he h ee models also con i m he hypo hesis, bu add mo e insigh in o he de e minan s o
unding. Model (2) adds he only o he demog aphic con ol a iable in ou da ase , which is he age o
he ounde in yea s. We ind ha age is nega i ely associa ed wi h unding success, and signi ican a
he 10% le el. The olde he ounde , he less likely he s a up will be unded by a p o essional in es o .
Azoulay e al. (2020) con adic his esul in hei s udy whe e hey ind ha in he as es g owing new
en u es, he mean age o he ounde s is 45 yea s. Simila ly, Wadhwa e al. (2008) ind ha he mean
age o ech ounde s is 39.
The e a e o he s udies ha a e consis en wi h ou esul ha olde ounde s may be a a disad an-
age. Ng and S ua (2016), using LinkedIn p o iles, ind ha new ech en u es a e ypically launched a
a ound i e yea s a e college g adua ion. F ick (2014) looks a unico ns (s a ups alued a highe han
one billion USD) and inds a mean ounde age o 31.
Model (3) ins ead looks a company cha ac e is ics as he con ol a iables, including whe he o no
he company is o ganized as a C co po a ion, whe he o no he company has e enue (no he amoun
o e enue), how many pa en applica ions ha e been iled, how many membe s comp ise he boa d o
di ec o s, and an in e ac ion a iable be ween boa d membe s and pa en s iled.
We ound ha pa en s and boa d membe s we e posi i ely associa ed wi h s a up unding and we e
s a is ically signi ican . En i y ype c-co p and e enue we e no signi ican . The c-co p esul is no su -
p ising, since a s a up’s legal en i y ype may be easily changed. The e enue esul is somewha su p is-
ing, because e enue is gene ally conside ed a s anda d de- isking a ibu e by ea ly s age in es o s.
Re enue can be in e p e ed as a signal ha he new p oduc o se ice has been alida ed by cus ome s
and hus mus ha e a leas some deg ee o p oduc -ma ke i . Thus, ou esul s appea o be inconsis -
en wi h s udies such as Hadley e al. (2017), who ind a posi i e co ela ion be ween e enue and VC
unding, bu do no make any claims abou he di ec ion o causali y, i any.
The ully speci ied model is Model (4), whe e bo h ounde and company cha ac e is ics a e consid-
e ed. The same explana o y a iables a e signi ican as wi h he p e ious models. To es ima e he op i-
mal le el o educa ion o a ounde , ega ding he a ac ion o unding om p o essional in es o s, we
ake he i s de i a i e o he linea model sugges ed by Model (4) wi h espec o educa ion yea s and
se i equal o ze o. Since he coe icien o he squa ed e m is nega i e (−0.2811), he unc ion ep e-
sen s a nega i e u-shape, so sol ing o ed y s will yield he cu e’s maximum. The esul is app oxi-
ma ely 4.3 yea s beyond high school, meaning ha he es ima e o he ideal numbe o yea s o
ounde educa ion mus be beyond a bachelo ’s deg ee. Since ou da a is coded ca ego ically (e.g. bach-
elo ’s deg ee ¼4 and mas e ’s deg ee ¼6, e c.), i is easonable o ound he esul o he nex highes
ca ego y since he e a e no pa ial deg ees in he su ey. Thus, he op imal le el o educa ion, based on
ou da a, is in e p e ed o be a mas e ’s deg ee.
Model 4 is p esen ed he e as a unc ion (1) wi h espec o ed y s wi h unded as “y”and ed y s as “x”.
O he con ol a iables will d op ou o he pa ial de i a i e wi h espec o x (2). Sol ing o ed y s (3),
we ind ha he op imal educa ion le el p esen ed by ou da a is 4.3 yea s beyond high school.
y¼2:4158x–0:2811x2−3:4078 (1)
Take i s de i a i e, se ing y equal o ze o:
:5622x ¼2:4158 (2)
Sol ing o x:
x¼4:3 yea s beyond high school (3)
4. Discussion
4.1. Con ibu ions
This a icle con i ms p e ious esea ch ega ding he ela ionship be ween ounde educa ion le el and
unding. We ind ha mo e educa ion is indeed associa ed wi h an inc ease in he likelihood o unding.
The main con ibu ion o his inding is ha i i mly es ablishes he ela ionship be ween educa ion and
equi y unding, no jus deb unding. P e ious analyses (Pinelli e al., 2022; Shane, 2003) ocus on
6 C. R. EVERETT
unding le el as he dependen a iable, whe eas we use a bina y ac o unding. This is impo an
because ou da ase mos ly consis s o s a ups ha did no ecei e p o essional unding, i.e. we
included many s a ups in ou analysis ha we e ejec ed by VC in es o s. The p esence o his con ol
g oup is c i ical o alid hypo hesis es ing.
An impo an seconda y con ibu ion is ha we ind a nega i e cu ilinea aspec o ha ela ionship.
This means ha al hough educa ion gene ally imp o es unding, oo much educa ion may ac ually
impai unding ou comes. Ås eb o and Be nha d (2005) ound a simila nega i e cu ilinea ela ionship
be ween educa ion and loan app o als, bu ou esul s add o he li e a u e by inding suppo o his
upside down u-shape wi h en u e unding as well. Ha ing he squa ed e m o educa ion yea s in ou
model allowed us o ake he i s de i a i e o he model and sol e o he op imal le el o educa ion.
The cu ilinea ela ionship is ac ually mo e in ui i e o equi y in es men han o lending, since lend-
e s a e unde s ood o be mo e dependen on conc e e inancial his o y, pe sonal his o y and a ios o
hei lending decision, whe eas equi y in es o s ha e he epu a ion as being mo e subjec i e.
The heo e ical basis o Hype hesis 2 ( he cu ilinea ela ionship) is he idea ha excessi e educa ion
can p oduce cogni i e igidi y, as p oposed by Pinelli e al. (2022). This would only a ec unding i he
in es o s belie e ha his cogni i e igidi y has nega i e ope a ional impac s (e.g. eluc ance o pi o ).
Ou s udy does no p o ide e idence ha educa ion le el is associa ed wi h his igidi y, bu me ely p o-
ides e idence ha in es o s migh pe cei e ha his associa ion exis s. Addi ional esea ch is equi ed
o es whe he o no he in es o s a e co ec , pe haps by compa ing unding success o e en ual (and
measu able) ope a ional success.
4.2. Limi a ions
The e a wo signi ican limi a ions o his s udy. The i s , which was discussed in he in oduc ion is he
po en ial bias when using su ey da a. The second is he limi ed sample size. The sample was no la ge
enough o s udy indus y e ec s, which we suspec could ha e been po en ially signi ican . Fo example,
i would be easonable o hypo hesize ha in es o s in he bio ech indus y may be mo e imp essed by
educa ion han in es o s in he e ail indus y would be.
5. Conclusion
This a icle suppo s he idea ha highe ounde educa ion le el is gene ally iewed as a posi i e ac o
o in es o s, bu also ha he e may be a poin whe e ounde s a e iewed by in es o s as oo edu-
ca ed. I would be imp ac ical o sugges o ounde s ha hey go back o school, bu hey migh be
wise o conside educa ion as one ac o when choosing co- ounde s.
This a icle does no (no ies o) answe he ques ion o whe he o no highe educa ion impac s
he ul ima e success o he s a up. Ra he , i a i ma i ely answe s he ques ion o whe he highe edu-
ca ion ma e s o in es o s. This means, in he p ac ice o en ep eneu ship, ha ounde s shouldn’
assume ha le el o educa ion is i ele an , and pe haps hey should build hei eam acco dingly.
In e ms o u u e esea ch, asce aining how he combined e ec s o ounde educa ion and o he
ac o s (e.g., expe ience, ne wo k, skills) impac s a up unding could p o ide a mo e comp ehensi e
pic u e. A la ge sample size would also be e y help ul in o de o be able o con ol o indus y, since
e y high le els o educa ion a e likely o be mo e impo an in some indus ies han o he s. In bio ech
o o he esea ch- ela ed indus ies, o example, ounde s wi h doc o a es migh unde s andably ha e
highe c edibili y wi h in es o s.
Acknowledgemen s
The au ho would like o acknowledge excellen esea ch assis ance om Amy Wood and Lau en Thomas.
Disclosu e s a emen
The au ho has no po en ial compe ing in e es .
COGENT ECONOMICS & FINANCE 7
