Founders' social capital - the road to start-up survival

Background: Start-ups’ contributions to shaping the economic landscape of the modern world are multifold as they are for example a source of productivity and economic growth or they are the source of net job creation. Yet, up to half of them fail during the first 3 to 4 years of their lives. As such, their founders face notable uncertainties whether their start-ups will survive or not. Many different factors have an impact on the likelihood of start-up survival, particularly social capital appears to play an important role in it. Purpose: The purpose of this thesis is to understand the role of founders' social capital in the survival of tech start-ups. We approach the survival from the perspective of challenges start-ups face in the early start-up and business development stage, and we look into how social capital contributes to overcoming them. Method: Our research was conducted from social constructionist view. We conducted a multiple case study with 16 start-up founders, who we interviewed in the Czech Republic. Conclusion: We offer three conclusions - firstly, social capital plays an important role in the early start-up phase most significantly by helping founders form the right teams, which then help the founders better address the other challenges such as acquiring customers or managing financing. Secondly, social capital helps the founders establish legitimacy and it connects them with more experienced people who help them avoid fatal mistakes in the business development phase. Thirdly, founders’ openness to network and awareness of their own limits resulting in reaching out for helpis also crucial for start-up survival