Team Attributes and Investor Attractiveness: The Relationship Between Founder Characteristics and Startup Funding

Abstract: This paper examines the relationship between professional experience, education and gender diversity of startup founding teams and funding raised. Intuitively, experience and education should have a positive impact on funding in early companies as the founding team is a crucial part of the investment decision for early investors. Data from 317 companies in the information and technology industry based in the Nordic countries and their 675 founders show that while characteristics such as business education, managerial experience and previous founding experience positively impacted the amount of funding a company raised, characteristics such as engineering degrees, software development experience and PhDs did not show a significant relationship. Gender diversity negatively impacted funding raised. The impact of these characteristics did not get weaker between the first and subsequent funding rounds, instead the correlations became stronger, indicating that the importance of founder characteristics is not diminished with time even though more financial data becomes available.