When we think of entrepreneurs our imagination leads to a young 20-30 year old, pounding away at the keyboard, writing software and drinking endless coffees at Starbucks. Right?
They have imagined a future, have limitless energy and dress down with a sharp mind.
This image has been cultivated over the last 15 years and has done more damage to the idea of entrepreneurship than good.
A recent research emerging from US Census Bureau and MIT indicates that the reality is just the opposite.
Myth Buster 1: Average age to start a venture
Average age of business founders is 45 years and founders in their 20s are least likely to build a top ranked firm.
Why these stereotype when the evidence is the opposite?
The common understanding is that young people have fewer family responsibilities, are natural risk takers and as some iconic tech founders say, “they are just smarter”.
They also make for nice movie scripts. A young college dropout or dissatisfied corporate slave thinks of a breakthrough, drops all else to take the market by storm and before you know it s/he is on the cover of Forbes (or choose your favorite magazine). The older folks in the story – the professor at college or the boss are work are simply sore losers.
This narrative has led the angel and venture firms to have a bias towards young founders leaving older and arguably more promising older entrepreneurs hang out to dry without capital.
Myth Buster 2: Average age to success and exit
The reality – and numbers don’t lie – is that successful entrepreneurs are middle-aged. Founders at top 0.1% of the fastest growing new businesses in US average 45+. Moreover, they also are more successful at exits.
While data is not available to explain the above but intuitively domain specific knowledge and insights, managerial expertise especially people and customer management, personal financial resources, deeper social and professional networks are important leverages that can make a start-up successful faster.
They can also parse out risk and reward more adeptly than younger founders. Frugal, or maybe prudent, financial management is also in favor of older entrepreneurs.
Their professional experience can lead to a customer pipeline – previous client relationships or vendor relationship can (and do) move with the older entrepreneurs.
A ‘one trick pony’ approach i.e. young, tech entrepreneurs with elite university education and big four background is fundamentally flawed.
Venture firms should shed that bias and treat older entrepreneurs/founders and their business on par. Pairing up youth with experience in an imaginative and creative way can create tremendous value and risk balance.
This bias has also led to funding business ideas that young people understand and, by extension, are impacted by. There are many innovations that are needed to serve the broader society and arguably older entrepreneurs need to be supported.
It’s time to call the bluff on the stereotypical ‘young breakthrough innovator’ – older entrepreneurs are just as adept. Numbers don’t lie.
PS: I highly recommend watching the movie “The Intern” that touches on this idea.
Whitney Johnson’s article in Harvard Business Review, Entrepreneurs Get Better with Age .
Reference work carried out by Duke University scholar Vivek Wadhwa
US Census Bureau