- Many people think of young examples — like Mark Zuckerberg and Bill Gates — when they think of successful startup founders.
- New research shows that these cases are more the anomaly than the status quo — the average age of the most successful founder is about 42 years old.
- Among the top 0.1% highest-growth startups the age increases to 45 years old.
- While founders in their 40s tend to have the highest rate of growth, researchers found that youth does have an advantage when gaining funds from venture capitalists, who are more likely to base their investments on appearance than on data.
Company founders can be as young as in their teens or as old as in their 80s. But is there an ideal age you should be when you start a company? It turns out there is, and it’s older than you may think.
Those are the results of surprising new research by the National Bureau of Economic Research (NBER). Rather than surveying a representative sample of entrepreneurs or asking experts’ opinions, an NBER research team actually assembled Census Bureau data and looked at hundreds of thousands of successful startups, especially those with rapid growth.
What they found was not what you might expect. Bill Gates started Microsoft at 20. Steve Jobs was 21 when he and Steve Wozniak started Apple. So you might logically think that the most successful fast-growth companies are started by very young founders who are unfettered by convention and unwritten rules, able to take risks, and unafraid to shake up the old order.
But that isn’t true. In fact, the researchers found, the average age of a successful startup founder is about 42. When it comes to high-growth super-successful startups, the average age is even older. When researchers looked at the top 5% of rapid-growth startups, they found the average founder age was 42.1. Narrowing their focus to the top 1%, the average age was 43.7. When they looked at the top 0.1% of fast-growing startups, founder age went up to 45. Contrary to popular belief, they concluded, youth is a disadvantage when it comes to creating a high-growth startup.
Wait a sec. Aren’t VCs supposed to be looking for the highest-growth startups? Isn’t that their mantra? They’re all but certain to lose money on the majority of companies they fund, so don’t they need those high-growth successes to make the endeavor worthwhile? Why are they funding startups whose founders are still too young to deliver the high growth VCs crave?
Because, whatever they may say, VCs aren’t using data to make their funding decisions, as TechCrunch notes. Instead, they’re going by look and feel, and the look they’re going for is typified by Mark Zuckerberg: young, white, male, privileged, and from an elite university. VCs implicitly admit that they’re ignoring the data with the often-repeated comment that they bet on the founder, not the business. This is why female founders still receive only about 2% of the funding VCs provide, even though the data shows that startups founded by women have greater odds of success.
VCs’ disdain for data is ironic, given that the most successful startups — think Google, Facebook, and especially Amazon — seem to owe their phenomenal growth to their practice of carefully gathering data and to strictly following that data wherever it leads them. Perhaps one day VCs will start doing the same. In the meantime, it’s nice to know that if you’re in your mid-40s, it might be tough to get venture capital funding — but if you start a business there’s a good chance it will do just fine.