FOUNDER’S PRE-FOUNDING EXPERIENCE AND START-UP PERFORMANCE

Almost always, 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 well articulated, especially in empirical research. Based on the resource-based view tradition, this paper tests if a start-up founder’s experiences before incorporation of business (“pre-founding experiences”) would be an important source 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 (“relevant experience”) and from 2) the relative diversity of the pre-founding experiences (“diverse experience”) are tested. The authors collected data on the venture capital investment (in the startups), particularly including their amounts of funding in total and in the first rounds separately. The results indicate that, firstly, the start-ups with more relevant pre-founding experiences receive a higher amount of financing in both short-term and long-term; secondly, the diversity of experience does not have any interaction effect between funding amounts by venture capitals and the relevant experience.