Startups: Vai-thee-fuss?. The unfortunate truth about ‘pedigree’ and the founder ecosystem

At a start-up event a few years ago, a smart young man requested for time to discuss something with me. He introduced himself as a computer science engineer from a reputed college in Bengaluru and an MBA from another well known institution in that city. He said he had been employed in an IT services firm for eight years, but had just resigned and was working on an AI (artificial intelligence) startup idea. He asked if entrepreneurs like him who did not possess an academic background from IIT/ IIM/ ISB were automatically at a disadvantage vis-a-vis founders from such storied institutions.

I stared thoughtfully at him for a long time, because he had raised an important issue. The unfortunate truth in the Indian startup ecosystem is that pedigree does matter. 

Founders possessing degrees from top institutes definitely have an advantage, especially in two key areas: Leveraging powerful networks through successful alumni in influential positions, who can open doors; and raising capital, because most venture capital firms also employ folks from these institutes and they are inclined to support their college alumni. I have personally experienced this when trying to raise capital for my ventures. 

However, there are other factors, too, that influence success, and entrepreneurs from more modest backgrounds should not lose heart. At its core, entrepreneurship is about fighting against challenges and coming out on top and, in that sense, these are just two more obstacles on the journey. Par for the course.

I told the young man that this is not about comparison. If he is working on an AI startup, then all that matters is what he is building. If his idea is exactly the same as that of another founder from IIT/ IIM and both approach the same VC firm for funds at the same time, then he would be at a disadvantage. But the chances of this happening are quite low and, hence, it really does not matter. 

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I also pointed out that while there are many successful founders from top institutes, there are enough inspiring ones from other backgrounds too. What’s more, there are quite a few big failed ventures from IIT/ IIM/ ISB alumni as well, thus proving there’s so much more to success than just the founders’ educational background.

Having said this, there’s definitely bias. Pedigree and background do matter, and if the Indian startup ecosystem needs to surge, then such biases must disappear. Much of this bias is actually caused by investors and the media, by associating success with academic backgrounds. While the positive aspect of the bias is understandable, what is disappointing is the negative belief that entrepreneurs who do not come from such backgrounds are unlikely to succeed. This is the real issue that needs to be tackled.

(The writer is a serial entrepreneur and best-selling author of the book ‘Failing to Succeed’; posts on X @vaitheek)