Founders in their early 20’s have the lowest likelihood of a successful exit or creating a 1 in 1,000 high growth company
There’s no question that entrepreneurs these days have it pretty good. But there’s a big misconception running wild on the streets of startup hubs – ‘Young founders do well’. Often a silicon valley investor will look for an entrepreneur, usually technical, and young – very young with absolutely no job experience at all. Even people like Peter Thiel have started a fund to award college dropouts with a $100,000 to start a business. One just needs to be below 23 years of age and a college dropout.
With media covering people like Bill Gates, Steve Jobs, Mark Zuckerberg, extensively, who started their business very early in their life, it has become a big misconception that, generally, young entrepreneurs do better than old-preneurs (Old entrepreneurs). A report by National Bureau of Economic Research has proved most of people wrong.
The researchers, Pierre Azoulay, Benjamin Jones, J. Daniel Kim and Javier Miranda connected a plethora of administrative data sets to understand the age of founders in startups and specifically, the age of founders in high-performing startups. These data sets are the best standard of data as unlike surveys or other sampling methods, they represent the entire populous under consideration.
The report stated that successful entrepreneurs are middle-aged, not young. It quoted, “Taking numerous measures to identify potentially high-growth firms as well as studying ex-post growth of each firm, we find no evidence to suggest that founders in their 20’s are especially likely to succeed. Rather, all evidence points to founders being especially successful when starting businesses in middle age or beyond, while young founders appear disadvantaged.”
It further added that across the 2.7 million founders in the U.S. between 2007-2014 who started companies that go on to hire at least one employee, the mean age for the entrepreneurs at founding is 41. The mean founder age for the 1 in 1,000 highest growth new ventures is 45.
The report found that the sector with the lowest age group as entrepreneurs were VC backed companies, where the average age of founders was 38. Also, a 50-year old founder is 1.8 times more likely to taste growth than a 30-year old founder. Further founders in their early 20’s have the lowest likelihood of a successful exit or creating a 1 in 1,000 high growth company.