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Faster financing or higher valuation: A difficult choice for the founders from good universities

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  • Li, Zhenyu
  • Zhu, Jiawen
  • Feng, Gengzhong

Abstract

While scholars and managers agree that the alumni of universities with higher reputations exhibit better financing performance, this study challenges this rigid conclusion. We propose an innovative mechanism influencing financing valuation, encompassing both direct and mediating effects. Specifically, we discuss the impact of different decision-making methods on the signaling effect. Through a regression analysis of 328 startups in China, we ascertain that only the founders of top universities can obtain shorter financing times and higher valuations. In contrast, founders from good universities must make a trade-off between faster financing and higher valuation or, with the help of financial advisors, obtain a higher valuation. Our findings contribute to the fields of entrepreneurial financing and signaling theory.

Suggested Citation

  • Li, Zhenyu & Zhu, Jiawen & Feng, Gengzhong, 2025. "Faster financing or higher valuation: A difficult choice for the founders from good universities," International Review of Financial Analysis, Elsevier, vol. 104(PA).
    • Handle: RePEc:eee:finana:v:104:y:2025:i:pa:s1057521925003746
    DOI: 10.1016/j.irfa.2025.104287
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