“Founders from IIT get funded because they are friends with biased VCs” said a founder friend, channelling a widely held belief
IIT Delhi has 32 unicorn founders. IIT Bombay has 20 unicorn founders. IIM Ahmedabad has 14. The top 5 IITs have 95 unicorn founders. The 3 IIMs have 25. 100+ unicorn founders are from these colleges. The bias appears obvious.
But these account for just 34% of the overall unicorn founder base, far lower than the 90% assumed
Top-tier pedigree is a door opener. People take you more seriously. Getting into a top IIT is a proxy for hard work, diligence and intelligence. Startup investors have to make investment decisions in weeks. Educational and work background tremendously help a VC, who otherwise has access to very few data points.
But that doesn’t mean it is the only evaluation criteria
Founders need to demonstrate leadership, vision, salesmanship and customer obsession eventually. None of these are taught at IITs. In fact speaking from experience, IITians are numbers-focused rather than stories, which can hamper key founder abilities. I have spoken to countless immensely talented IITian founders who struggle with the above.
Your pedigree becomes your weakness because people assume a high bar
In 2021, the 3 most valued companies in India were BYJUs, PayTm and OYO. While their valuations, like most large unicorns, have taken a hit, they did reach incredible heights. All 3 had no pedigree. If you look at the overall Indian unicorn founder base, 116 don’t have any pedigree.
~40% of the 300 unicorn founders being pedigree-less is not small
I was surprised also to learn that just 1 of the 10 top unicorns from IIT Delhi were backed by VCs also from IIT Delhi. Having partnered with ~20 companies, I have partnered with 1 IIT Bombay founder and 0 IIM Ahmedabad founders. While we pay more attention to pedigree, being from the same college seems to have little impact on actual investing
Knowing a VC well doesn’t guarantee much
Some of India’s greatest industrialists like Mukesh Ambani, and some of the greatest founders like Shiv Nadar had no pedigree. The reality of business is that pedigree is neither a necessary nor sufficient condition for outsized success. The market is god, period.
Those who leverage their pedigree, or are driven by the lack of it, ultimately build outstanding companies