Explainer: why some founders raise more money than others

Apr 28, 2022|Jonathan Ntege Lubwama

In 2012 Paul Graham, the founder of the prestigious startup accelerator and venture capital firm Y Combinator equated being a startup founder to being an “economic research scientist”. In his words, “you don't know for sure which problems are soluble; but you're committing to try to discover something no one knew before”. Think of the previously crazy-sounding ideas that are now businesses, like sleeping in a stranger’s house while on vacation instead of a hotel (Airbnb) or building a massive taxi company without owning any taxis or hiring any drivers as employees (Uber).

When a founder discovers this solution, they call it a startup.

Key takeaways:

Startups are designed to build products for a large market that are high-impact and hyper-growth. To get off the ground or grow as fast as they should, they turn to funding from investors.
Due to the high failure rates of startups, investors are always on the lookout for founders they believe are better suited to solving a particular problem with education background and previous work experience being the key influencers.
With 58% of the funding raised by African startups coming from the USA and UK, these biases work in favour of the foreign-educated CEOs who raised 73% of funding in 2021 compared to 37% raised by the locally-educated CEOs.

Startups are designed for high growth and disproportionately high impact. They are designed