How do they learn from the past? The effect of founder prior experience on new venture formulation

This study explores how founders’ prior career experiences affect the extent to which their new ventures are formally structuralized at the founding stage, and discusses how the origin of funding sources moderates the relationship between the founders’ experiences and the degree of new venture formalization. Through an analysis of the founders of 2,736 new ventures, all established in 2004, this study explores how two types of prior founder experiences -- working and founding experiences -- distinctly affect new venture formalization. Findings indicate that while a founder’s prior founding experience increases the likelihood that new ventures will formalize their organizational structure, his/her prior working experience does not. However, the degree of new venture formalization does increase for founders with prior working experience when their new ventures receive VC funding.