This paper investigates how social capital affects innovation. I measure a firm’s social capital with connected holdings, which is the fraction of equity of a particular firm held by mutual fund managers that are connected to the firm’s board members through educational networks. I use plausibly exogenous variation in the network sizes of board members as an instrument for connected holdings. I find higher connected holdings lead to larger number of patents granted, more patent citations and higher firm value created by patents. Connected holdings foster innovation by helping to reduce short-term capital market pressures and to increase management job security.