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Alumni networks are powerful source for start-up capital

Looking for funding for your start-up? Tap into your alumni network.

That’s the conclusion that three academic researchers made after analyzing almost two decades of data on early stage venture capital activity where they found evidence of just how powerful alumni networks are to the ultimate viability of start-ups.

According to this article, the size of a founder’s own alumni network may be the deciding factor in the entrepreneur’s early stage fundraising success. Investors are more likely to position their portfolio to invest in start-ups created by founders from their alma mater and to make bigger bets on these firms.

The research paper, titled “Alumni Networks in Entrepreneurial Financing,” is a collaboration among Jon Garfinkel, Professor of Finance at the business school of the University of Iowa; Erik Mayer, Assistant Professor of Finance at Southern Methodist University; and Emmanuel Yimfor, Assistant Professor of Finance at the University of Michigan’s Ross School of Business.

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