In the move from academia to the world of entrepreneurial ventures, first-generation higher education graduates come up against a host of structural, financial and socio-cultural impediments that set them apart from their continuing-generation counterparts. These are individuals who should be key to grassroots innovation and socioeconomic mobility yet find their path hampered by compounding obstacles. Policy may extol the virtues of starting up as a means to build wealth but institutional mechanisms are wont to overlook the liabilities of not having intergenerational professional social capital or a financial safety net. We have put these multidimensional barriers under the microscope in this study, looking at what constrains a first-generation graduate’s ability to put together a business network, acquire seed capital and tolerate risk.
Our mixed-methods approach has been applied with rigour to get at both the econometric data and the individual realities on the ground. A survey was put before 850 recent university graduates in different economic sectors who were in the process of creating a startup; the quantitative results from this have been triangulated in depth with qualitative material from 60 semi-structured interviews with such founders as well as venture capital assessors and incubator directors at universities. The numbers were subjected to an advanced statistical regime, including confirmatory factor analysis (CFA), reliability testing and hierarchical multiple regression, to see how deficits in social and financial capital bear on the survival of a venture.
The transcripts tell a story of systemic exclusion from the informal networks of angel investors and the psychological toll of putting one’s own finances on the line. What the empirical evidence shows is a deep structural divide: 94% of first-generation graduates would describe the lack of a family safety net as a severe barrier, with 42% having to make do with personal savings alone for their initial outlay. Our hierarchical regression turned up a strong negative correlation (β = -0.58, p < 0.001) between the speed of venture establishment and the combined weight of student debt and capital shortfalls. On the other hand, we found that having access to an institutional incubator’s mentorship can go a long way to forestall failure (β = 0.51, p < 0.001). It is our conclusion that to foster more graduate entrepreneurship, policy must do more than offer some basic training; there is a need for proactive integration of social capital, grants for seed funding and guarantees to mitigate risk.