Predictors of funding success in early-stage DACH-based fintech startups

Abstract

The present study identifies factors affecting the ability of early-stage fintech startups in the DACH-region to secure funding subsequent to their initial successful fundraising. The research addresses a gap in the existing literature by focusing on a specific sub-segment of startups rather than being geography and sector agnostic. It uses a mixed-methods approach that combines logistic regression analysis with qualitative validation expert interviews on both investor and investee sides. The central results show that a shorter time to initial funding improves the likelihood of subsequent fundraising within three years. The initial funding type also impacts future fundraising likelihood, with firms initially funded by accelerators or incubators being less likely to secure subsequent investment. The results also show that the educational background of the CEO of the startup affects the ability to raise subsequent funds. A bachelor9s degree or a doctorate is predictive of improved funding success whilst an MBA or master9s degree is not. Sector-specific findings suggest that SaaS-focused fintech startups are more likely to secure subsequent funding, whereas those in the crypto sector are less likely; however, the use of ICO financing in the latter biases the results. The results are useful for both prospective investors and investees. Investors can use the identified factors to improve informed investment decision-making at minimal cost. Founders can leverage these findings to enhance their startup's fundraising ability. While the study contains robust findings, it is limited to its geographic and sector-specific scope. Thus, further research is needed in the field.

Date of Award	28 Jun 2024
Original language	English
Awarding Institution	Universidade Católica Portuguesa
Supervisor	Michael Tröge (Supervisor)