Research on the relationship between founder's pre-founding experience and start-up funding amount

Abstract

The importance of prior experiences in a corporate setting has been emphasized. However, despite its anticipated importance, the role of prior experiences for start-ups has not been empirically well-articulated. Based on the Resource-based View tradition, this paper investigates if a start-up founder’s experiences before incorporation of business would be the driver of heterogeneity in firm performance. In particular, the impacts on performance from 1) the relative closeness between the founder’s working experience before the start-up’s incorporation and the start-up’s own business (i.e., relevant experience) and from 2) the relative diversity of the pre-founding experiences (i.e., diverse experience) are tested. The author collected data on the venture capital investment from the Crunch Base, particularly including their amounts of funding in total and at the first rounds each. This study found the start-ups with more relevant pre-founding experiences receive a higher amount of financing in both short- and long-term

secondly, the diversity of experience does not moderate the relationship between funding amounts by venture capitals and the relevant experience.