Struggle, Not Pedigree: "Outsider" DNA Builds Unicorns

Who Founds Unicorn (Billion-Dollar) Startups

An analysis of unicorn founders — those who’ve built startups valued at $1B+ — is challenges the Silicon Valley status quo. The April 2025 Unicorn Report by Stanford professor Ilya Strebulaev’s team reveals that many unicorn creators don’t fit the stereotypical mold of Ivy League, ex-big-tech executives. In fact, 60% of U.S. unicorn founders hit it big on their very first startup attempt, 21% with roots in the Midwest (e.g., grew up, built a company there, or went to a Midwest university) [internal data], and only 22% had any prior CEO experience before founding their unicorn. Nearly half of these founders have global roots as well: 45% of U.S. unicorn companies have at least one founder who was educated abroad, and 44% of unicorn founders were born outside the United States. One last interesting statistic is that the dropout rate for unicorn founders is 250% higher (5.3%) compared to the random sample (2.1%). What the data really shows is that grit, originality, and an unconventional path often count for more than elite credentials in building a billion-dollar business.

Chart: A majority of unicorn founders (60%) built a billion-dollar company on their first try, while only 6% required four or more attempts. This runs counter to the notion that only veteran serial entrepreneurs can create unicorns.

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As an early-stage investor at Redbud VC, I found these findings validating. Comparing our portfolio to Strebulaev’s Unicorn Report, the parallels jumped out — but our data tilts further toward founders who come from struggle rather than status.. Redbud’s portfolio founders are overwhelmingly “outsiders” by traditional measures. About 61% were first-time entrepreneurs (in line with the ~60% national figure), but notably, 45% of our founders are immigrants, and 48% have roots in the Midwest, with 23% based in the Midwest– a proportion meaningfully higher than the national unicorn averages of 21% and 4%, respectively. In total, roughly 65% of Redbud-backed companies have at least one founder who is either an immigrant or has roots from the U.S. heartland, which aligns with the national average of ~60% [internal data]. Redbud’s portfolio features a higher percentage of immigrant founders, combined with themself or co-founders with roots in the Midwest. Our portfolio skews toward the very profiles often overlooked, yet they share many of the characteristics rooted in the DNA of unicorn founders. That’s not a coincidence. It’s our thesis in action.

“People Strengthened by Struggle” — Redbud’s Outsider Thesis

At Redbud VC, we’ve built our investment thesis around a simple idea: the greatest driver of venture returns is the selection of founders strengthened by struggle. This thesis draws on our team’s experience; for example, Willy and Jabbok Schlacks, founders of EquipmentShare, did not attend high school or college and grew up in an unconventional environment. They began building companies from a young age to support their community, then left mid-life to build businesses in a capitalistic environment. None of our core team members attended Ivy League schools, worked in big tech, or came from a privileged network. We love backing entrepreneurs who build with a subconscious chip on their shoulder. Their struggle triggers the creativity that can unlock outsized value.

We seek out entrepreneurs who have overcome adversity, operated outside traditional privilege, or otherwise developed an extra gear of perseverance. Why? Because building a startup is one long road of challenges, and those who have been forged in fire tend to endure and adapt when new obstacles arise. Grit is a better predictor of long-term success than any resume bullet point.

Many funds seek pedigree and/or traction, leaving an awkward middle where someone is proving their pedigree with an attractive entry point to support their path to traction. We love underwriting the intangibles that make other fund managers pause.

This philosophy leads us to founders others might underrate: the immigrant who navigated a new culture and visa hurdles, the Midwest engineer who built a business far from Sand Hill Road, the scrappy first-timer who doesn’t “look the part” of a tech CEO. These outsiders often possess intangible strengths — resilience, resourcefulness, hunger — that don’t show up on a LinkedIn profile but matter enormously in a startup’s trajectory. As an investor, I’d take a relentless first-time founder over a complacent veteran any day. The data backs this up: most unicorns aren’t founded by ex-FAANG executives or repeat founders with big exits, but by relatively inexperienced yet high-learning, high-determination individuals.

Our internal numbers highlight how differentiated our pipeline is. Nearly half of Redbud founders are immigrants, on par with ~44% of U.S. unicorn founders overall. Likewise, 48% of Redbud founders have ties to the Midwest (either by birth, education, or by building their companies there), whereas the lion’s share of unicorns nationally emerge from coastal upbringings and educational backgrounds with only 18% hailing education from a Midwest university and cumulatively 21% having Midwest DNA (grew up or built a company there). That said, 80% of the over 1.5k companies with Midwest DNA were built outside the Midwest. This speaks to our conviction: the best opportunities often come from the places most people ignore. Many of these founders have had to punch above their weight to get noticed — and that tenacity serves them well in the market.

For example, we invested in a founder who built a company in Miami, FL, and attended Ohio State, where they worked after graduation. He founded a company in the imaging care industry, an industry in which his parents worked, and subsequently pursued a career in medical sales. He had never founded a tech company and went through the XRC Ventures program, where we met him. We invested at a favorable valuation that other tier 1 investors passed on for multiple rounds of funding. The business was consistently undercapitalized, but the founder is one of the biggest hustlers we’ve met, and he always found a way to push through, even when the company closed a round that is 42 times our investment, nearly returning the entire fund. This founder is the definition of a Redbud founder. He grew up and worked in an industry where he gained unique insight into a pain point, possessed a strong ability to articulate, had the technical talent to build, and never gave up, even when all the odds were against him.

We have many more like this, and we can’t wait to back the next outsiders.

Undervalued Assets: Grit, Geography, and Fresh Perspective

Founders who don’t fit the classic pattern often start with fewer advantages, which paradoxically can make them stronger. Operating with constrained resources (far from Sand Hill’s easy money) forces efficiency and creativity. Living outside echo chambers yields unique insights into problems and markets that coastal peers might miss. If you’ve had to navigate a new country or grind it out alone in a small town, you’re already used to the kind of unpredictability that defines startup life. In the words of one of our founders, facing hardship “taught me to bend without breaking,” a trait that has literally kept their company alive through pivots and near-failures.

From an investor’s standpoint, these “outsider” founders present an arbitrage opportunity. While some VCs chase the familiar pattern (Stanford CS grad, ex-Googler, two-time founder, etc.), we have found that betting on unorthodox founders allows us to efficiently underwrite intangibles — essentially, to spot the gold in candidates that others overlook. By doing so, we’re often able to be the first check in over half of our investments, investing at reasonable valuations and on founder-friendly terms. We’ve won deals against much larger coastal funds because the founder sensed we truly believed in them and rolled up our sleeves to bring in customers before even getting an allocation in the round. That trust equity pays off not just morally but financially: entering early with conviction means we secure meaningful ownership in companies that later rounds validate at much higher prices. In other words, finding grit early leads to great economics later.

One example: we were the only investors in a founding team tackling an unsexy problem in the Midwest. Competing investors questioned the market and the founder’s non-traditional background. We saw a “person strengthened by struggle” — someone who had bootstrapped a previous small business and knew this industry inside out — and we leaned in. That company is now one of the fastest-growing in our portfolio, and our early conviction afforded us a large stake and influence in its direction. This pattern repeats itself across our deals. By focusing on character and potential over polish, we consistently get in early on future unicorn leaders. As a bonus, these founders tend to build culture-rich, disciplined companies that endure; they value each opportunity deeply, having never been handed anything on a silver platter.

The Legacy of Outsider Founders

If all this talk of immigrant and heartland entrepreneurs sounds romantic, it’s because the story of American innovation is romantic — and diverse. Some of the most iconic U.S. companies were led by people with Midwest DNA, outside the elite bubble.

• Disney — Walt Disney first honed his craft as a Missouri farm boy drawing cartoons in Kansas City.

• Walmart — Sam Walton founded Walmart in Arkansas after growing up in Columbia, Missouri, during the Great Depression, and attending the University of Missouri.

• Google — Larry Page was born in Michigan to academic parents, and launched Google after attending the public University of Michigan for undergrad.

• Apple — Ronald Wayne was born and raised in Cleveland, Ohio. He partnered with Steve Jobs and Steve Wozniak to start Apple in 1976, drafting its original partnership agreement and designing its first logo, before selling his stake early. 

• GoodLeap — Hayes Barnard — Founder and CEO of GoodLeap, a fintech platform for sustainable home upgrades. Born in Missouri, Barnard started in sales and built multiple companies combining finance and clean energy.

• Broadcom — Henry Nicholas — Co-founder and former CEO of Broadcom, born in Cincinnati and raised in the Midwest. Nicholas helped grow Broadcom into a global leader in semiconductors and broadband technology.

• a16z/Netscape — Marc Andreessen was a kid in small-town Wisconsin and an undergrad at the University of Illinois. 

• Twitter/Square — Jack Dorsey grew up in St. Louis, Missouri, where he began programming dispatch software as a teenager. He has cited his upbringing outside the tech bubble as key to his creative approach to building products.

• Square — Jim McKelvey built Block (formerly Square) drawing on his St. Louis roots and a deep understanding of the needs of “mom-and-pop” merchants. 

• Berkshire Hathaway — Warren Buffett grew up in Omaha, turned Berkshire into an investment conglomerate. His Midwestern pragmatism and patience made him one of the wealthiest investors of all time, and he continues to operate out of Omaha to this day.

• Zapier — Wade Foster started Zapier from Columbia, Missouri, while working at Columbia founded Veterans United.

• OpenAI — Sam Altman was raised in St. Louis, Missouri, not Palo Alto — an outsider to Silicon Valley until he made himself indispensable to it.

• EquipmentShare — Willy and Jabbok Schlacks were raised in a rural town outside Columbia, Missouri, with no formal education, built one of the biggest YC-backed startups.

And it’s not just Midwesterners. Immigrants, too, have left an indelible mark on the U.S. startup landscape.

• SpaceX/Tesla — Elon Musk was born in South Africa, Musk immigrated to the U.S. via Canada. He co-founded PayPal, Tesla, SpaceX, Neuralink, and The Boring Company — building some of the world’s most valuable and transformative companies, with a vision shaped by his outsider perspective.

• Google — Sergey Brin immigrated to the U.S. from the Soviet Union as a child, later co-founding Google while at Stanford, redefining search and online advertising.

• NVIDIA — Jensen Huang was born in Taiwan and raised in Thailand, Huang moved to the U.S. at age 9. He founded NVIDIA, which became a leader in graphics and AI computing, now one of the most valuable tech companies in the world.

• Zoom — Eric Yuan was born in China, Yuan moved to the U.S. after being rejected for a visa eight times. He founded Zoom, which became indispensable for remote work and communications globally.

• Stripe — Patrick & John Collison are Irish brothers who immigrated to the U.S. to attend MIT and Harvard. Together, they founded Stripe, revolutionizing online payments and becoming two of the youngest self-made billionaires.

• Flagship — Noubar Afeyan was born in Lebanon to Armenian parents, Afeyan immigrated to the U.S. and founded Flagship Pioneering, incubating biotech unicorns like Moderna, which developed a leading COVID-19 vaccine.

• PayPal — Max Levchin is a Ukrainian-born entrepreneur who immigrated to the U.S. at 16 and co-founded PayPal.

The common thread isn’t a zip code or a pedigree — it’s that these founders had something to prove and nothing to lose. They were conditioned by circumstance to be bold, persistent, and creative, which turned out to be exactly what their companies needed to defy the odds.

The takeaway: betting on outsiders isn’t charity or social policy — it’s smart business. Historically, outsiders have been the engines of innovation, precisely because they see the world from a different perspective. As venture investors, we would do well to remember that groundbreaking ideas often germinate far from the usual gardens.

Chart: ~44% of U.S. unicorn founders are immigrants (born outside the U.S.). This “immigrant edge” is a significant driver of innovation — and Redbud’s portfolio reflects it, with 45% immigrant founders. (Source: Stanford Venture Capital Initiative)

Blending Data with Conviction

The data addressed reflects the kind of founders we have already bet on and quantifiably affirmed that our focus on gritty, underdog founders is market-aligned. When 60% of unicorn founders are first-timers and 78% have never been a CEO before, it’s clear that what makes a great founder isn’t formal experience — it’s talent and tenacity. When nearly half of unicorns have a foreign-educated or immigrant founder, it’s evident that opportunity is borderless and brilliance is evenly distributed (even if access to capital is not). And when so few unicorns historically come from the Midwest heartland, yet our portfolio is two-thirds composed of Midwestern or immigrant founders, it tells me we’re fishing in the right waters. We’re willing to go where others aren’t — geographically and metaphorically — to find exceptional people. Like they say, “talent is evenly distributed, opportunity is not.”

To be sure, none of this is to disparage the Stanford-educated ex-Google product manager founder — there are plenty of those doing great things too. But our point is that ability and drive come in many forms. By broadening our aperture beyond the usual suspects, we avoid groupthink and find phenomenal opportunities hiding in plain sight. Our job as a VC is to see potential where others see risk, and to back founders who feel destined for greatness even if their CV doesn’t scream it. Often, that means trusting our qualitative judgment — the “people strengthened by struggle” ethos — alongside data. It means spending extra time getting to know founders’ personal stories, not just their business plans. That’s how you learn that a quiet first-timer might have more fire in the belly than a polished second-timer.

In venture, as in startups, there are no guarantees. But I believe our approach stacks the deck in our favor. We bet on founder quality above all else — on character, humility, and grit — and the Unicorn Report suggests those traits truly underpin success. We also intentionally invest outside the noisy, overcrowded hotspots, which allows us to win deals on founder trust and favorable terms, not just the highest valuation. Roughly half of our portfolio companies took Redbud’s money first before any coastal firm noticed them. That early position not only gives us ownership upside, but it also forges a loyalty that helps us support the founders better through the ups and downs. It’s a virtuous cycle: outsiders back outsiders, and together we beat the insiders.

A Note to LPs and Founders

To our investors (LPs): Our strategy is not aspirational rhetoric; it is producing measurable results. The founders we back — often immigrants, Midwesterners, or otherwise overlooked — demonstrate greater discipline with capital, iterate faster, and show resilience before ever raising capital. They are building substantive solutions to real problems, and their progress reflects that. The data addressed affirms our belief that continuing to back founders strengthened by struggle can produce outsized alpha.

To founders: If you have been told you do not fit the mold, that may well be your greatest advantage. When a company faces its most difficult moments, it is not pedigree that sustains it — it is resilience. Whether you are building alone in a small town or pursuing your vision as an immigrant, this is the best time to be an outsider in startups. The data shows you have every opportunity to build a unicorn alongside — or ahead of — the standard-bearers from privileged paths. Your perspective, your experience, and your determination are unique to you. Lean into them; they are your competitive edge.

I am an investor who grew up far from the Valley with a chip on my shoulder due to a lack of pedigree. I’ll continue to bang this drum: billion-dollar companies can start anywhere and by anyone. Talent is everywhere; what’s scarce is opportunity and early believers. Redbud VC was founded to be one of those believers, to provide that first critical check and support to founders strengthened by struggle. We’re proud that our portfolio’s diversity — of origin, of path — is its superpower. And we’re excited to quantify the patterns we have seen: outsiders are often the ultimate insiders when it comes to building lasting value.

Don’t confuse our strategy with being refined to a specific geography or demographic; we invest in those we believe are the outliers. A symptom of our success is that ecosystems like Missouri continue to grow, and we can pave paths for the next generation of outsider entrepreneurs to build massive companies. Places like Missouri don’t have a capital problem, but a lack of knowledge sharing and network effects. We unlock those with our network and hustle. We are in the business of making money in the spirit of supporting builders strengthened by struggle.

In the end, betting on grit, geography, and non-traditional founders isn’t just a social statement — it’s an alpha strategy. We will continue to refine it, data in one hand and conviction in the other. The next generation of legendary companies will not all come from San Francisco or Boston, although many will; many will sprout in places and faces that conventional wisdom overlooks. And when they do, we’ll be right there, penning the first term sheet :)

Outsiders make the best insiders.

Sources:

1. Ilya Strebulaev et al., Unicorn Report (April 2025) — Stanford Venture Capital Initiativelinkedin.com.

2. Strebulaev, I. “The Immigrant Edge: How Foreign-Born Entrepreneurs Drive America’s Unicorn Boom.” Crunchbase News, May 13, 2025news.crunchbase.comnews.crunchbase.com.

3. Strebulaev, I. “Google, Stanford And The IDF: Professional Backgrounds Of Unicorn Founders.” Crunchbase News, Mar 13, 2025news.crunchbase.comnews.crunchbase.com.

4. Stakehouse fund thesis https://www.stakehouse.fund/thesis

5. Strebulaev, I. “Unicorn Report Highlights: Non-US Universities Powering America’s Unicorns.” LinkedIn, linkedin.com.

6. Redbud VC internal portfolio analysis (2025) — Founder demographic data (immigrant status, Midwest ties, prior founder experience).

7. Historical biographies (various)

Brett Calhoun is a General Partner at Redbud VC, an early-stage fund that invests in founders strengthened by struggle. He can be reached at brett@redbud.vc.