How improbable is it that a founder with student loan debt will grab seed funding?

I noticed that student loan debt is almost never mentioned in articles discussing the acquisition of angel funding and funding from VC's. I have a hard time believing that investors will invest in those who have insurmountable debt to deal with upon graduation (or any student loan debt at all), despite how good an idea or product will be.

As a person who will come out of school with debt, considering my interests in pushing out a product I'm working on, I fear that my debt will play a major role in finding any financial backing. Why would an investor invest in a product that's being controlled by a person who is in debt?

I've read, on numerous occasions, that VCs/angels look for people who are hungry and competent (among other things, obviously). If that's true, then sure, student loan debt might play a positive role because a graduate might be so eager to get rid of their financial burden that they take the product to remarkable heights, leading the investor to large returns. On the other hand, student loan debt might get in the way of a graduate's entrepreneurial priorities. In that case, of course, it wouldn't be advantageous of the investor.

So, is it highly improbable that an investor would throw their money into a product/company produced by a person with student loan debt? Is it even a factor, usually? I'm assuming it does, especially since the debt is so common. Is a recent graduate better off footing it on their own, resorting to mediums like KickStarter?

Getting Started Angel Investors Debt

asked May 14 '13 at 07:19

Mr Spock
106 points

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I really doubt Zuckerberg or the Google guys were ever asked "do you have student loans?" – Frenchie 11 years ago
Sure, but not every founder goes to Harvard and has a team of soon-to-be Harvard grads by their side with wealthy parents backing the alleged legitimacy of their business. I'm not saying investors are generally so superficial, but there's a chance they might look beyond the $70k debt of a student like Mark because of what and who he's affiliated with. He wasn't the average Joe by any stretch of the imagination. ...And I hate to sound bigoted. – Mr Spock 11 years ago
No, I mean investors only really care about you potentially making them money, the rest doesn't matter much. In general, what you consider to be super important may only be totally secondary to someone else so don't think that because you think something is important, that it actually is. – Frenchie 11 years ago

1 Answer

So, is it highly improbable that an investor would throw their money
into a product/company produced by a person with student loan debt?

Is it even a factor, usually?

Probably not.

Why would an investor invest in a product that's being controlled by a
person who is in debt?

Because, unless the debt is from an addiction or problematic behaviour, there's no relation between the personal debt and the professional performance. Especially when it comes to something as ordinary as student loans.

answered May 14 '13 at 08:03

Littleadv
5,090 points