At what age do you think most entrepreneurs founded their startups?
As many of today’s high-profile startups began when their founders were in their 20s, it is understandable that many people would answer somewhere around the age of 25.
Just look at several MicroVentures portfolio companies: Snap was co-founded by Evan Spiegel when he was 23. Dropbox was founded by Drew Houston when he was 24. And Facebook was founded when Mark Zuckerberg was just 19.
However, the National Bureau of Economic Research (NBER) recently released a study following a review of Census data surrounding hundreds of thousands of startups, particularly those that have found a certain level of success and are experiencing high growth. The results showed that the average age of a startup founder is 42.1.
The Kauffman Foundation conducted a similar survey of 549 startup founders of successful businesses in high-growth industries and found the typical founder to be 40 years old with at least six to 10 years of experience.
What does this mean for investors?
- It’s important to conduct thorough due diligence on the startup as a whole before making an investment. Things like product-market fit, information security, social media, and the entire management team are important, as are a startup’s burn rate and other financials. Investors should be wary of making decisions simply based on a single factor – and should try to eliminate ageist thinking.
- Industry experience can be a huge asset for a startup founder. In fact, studies have found that “opportunity discovery is a function of the distribution of information in society.” In other words, it is experience that allows entrepreneurs to find opportunities for disruption in existing industries. In addition, with that experience may come a larger professional network, more leadership experience, and knowledge of business practices.
- Different industries may attract founders of different ages. While a younger startup founder may be drawn to influencer marketing or self-improvement, an older startup founder may be drawn to business services or consumer services.
- Older founders are more likely to be serial entrepreneurs, or individuals who have founded and exited several startup companies, as they’ve typically been in the business world longer. While serial entrepreneurship doesn’t mean a founder has found success with every venture – and, often, it means the very opposite – it does mean the founder is more likely to understand the startup world, from pitching VCs to working with a lean operating model.
Want to learn more about due diligence? Visit our Venture Capital Education Center to see the typical due diligence process, including each phase and criteria.
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