Founder human capital under institutional heterogeneity: category-based evaluation in emerging market financing

Purpose Prior research often assumes that stronger founder human capital uniformly increases a startup’s likelihood of securing external financing. This study aims to examine whether this assumption holds in emerging markets where educational and professional credentials originate from institutionally diverse systems of validation. Design/methodology/approach Using startup-year panel data on early-stage investments in Türkiye between 2016 and 2024, the author analyzes how investors evaluate three founder categories based on the institutional origin of their educational background: returnees from developed countries, returnees from other countries and local elite founders. Findings Returnees from developed countries are most likely to obtain early-stage funding, particularly when prior work experience in the home country reduces concerns about local embeddedness. Returnees from other countries show a negative but less robust association with funding likelihood, though they benefit from affiliations with venture development organizations, which help mitigate ambiguity about their credentials. Originality/value The findings suggest that under conditions of institutional heterogeneity, investors do not evaluate founder human capital as a simple accumulation of credentials. Instead, capital allocation reflects category-based evaluation processes in which founder backgrounds activate distinct uncertainty profiles.