Kauffman Study on Startup Founders

The Kauffman Foundation in Kansas City just published the results of a research project led by North Carolina entrepreneur and Duke Professor Vivek Wadhwa.

The results include a comparison of the success of startups (opened between 1995 and 2005) by the level of education achieved by their founders. I would assume the founders in most cases completed the mentioned level of education before launching the startups although I'm sure a few crazies :) did both at the same time for a while.

I'm fascinated to see that even in the risky and dynamic world of startups the correlation between education and success (as measured by annual revenue and a count of workers employed) is strong. Startups founded by alums with higher degrees and from Ivy-League universities had an average of $4.5 million in revenue more and 37 employees more than founders with high school degrees.

In the middle were four year degree founders from a wide variety of universities, like myself from UNC. Also very important to me was the fact that 45% of founders started their companies in the same state where they received their education, as I have now done several times.

The correlations:

• the level of education of founders to the success of their startups (in terms of revenue generated and workers employed)
• nearly half of startups open in the state that their founders received their education

Both of these are great explanations for why the Triangle of North Carolina has so many entrepreneurs and a high number of success stories.

I wonder though if the level of education (or more importantly the pedigree of the university) is simply a driver of access to other successful people and opportunities and thus the cause of the effect more than the value gained from the additional learning.

I'm sure a lot of people would argue otherwise. But, the fact that a state's investment in public universities comes back in job creation from 45% of the startups founded by its graduates on average is truly inspiring.

Kudos to the Kauffman Foundation for completing this research and for their support of UNC and other entrepreneurial universities across the nation. More information on the Kauffman study is available on the Kauffman website.