Here’s the Age You’re Most Likely to Gain Startup Success

As tech firms work to settle charges of ageism and retreats are popping up to help workers over 30 learn to compete with younger employees, many people may assume that any age over 25 is too old to launch a startup. But luckily for older workers, that view is inaccurate. In reality, the mean age for founders at the highest-growth new ventures is 45.

That’s the word from a report conducted by researchers from MIT, Northwestern University and the US Census Bureau, which was recently published by Northwestern’s Kellogg School of Management. Escalon analysts reviewed the data to determine whether age is just a number or if it really makes a difference when starting a business. Some of the results were surprising, but most data will help entrepreneurs of all ages realize that each person has something unique to bring to the table.

Although the study supports the journey of older founders as they launch startups, it also solidifies how venture capitalists feel about entrepreneurs from all age groups – and getting a handle on that data can help you prepare if you’re planning to raise funds.

Do 20-Something Founders Have the Lowest Likelihood of Success?

The MIT/Kellogg researchers used administrative data from government sources and other information to analyze the demographics of business founders, and then tracked the success of those companies as time passed. Ultimately, the data included a list of 2.7 million business founders who hired at least one staff member from 2007 to 2014.

The study found that “founders in their early 20s have the lowest likelihood of successful exit or creating a one in 1,000 top growth firm,” which appears to contradict many of the tales that have been repeated in the media over the past several years. Everyone recalls Mark Zuckerberg’s statement in 2007 that “young people are just smarter,” but just because he said it doesn’t mean it’s backed up by data.

If Zuckerberg’s statement were true, then Elon Musk would have peaked years ago, after founding Zip2 and X.com. Instead, Musk has gone on to repeat successes with his later ventures, Tesla and SpaceX. The same could be said of Richard Branson, who started Virgin Records at 22 but went on to launch Virgin Galactic at 54.

The Kellogg/MIT study authors wrote, “Our primary finding is that successful entrepreneurs are middle-aged, not young. We find no evidence to suggest that founders in their 20s 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.”

Mean Age for Founders Is 41.9

The average age for entrepreneurs whose businesses eventually hire at least one staff member is 41.9 years of age, the Kellogg researchers found. However, the mean founder age for the new ventures with the highest growth rate is 45. “The most successful entrepreneurs in high technology sectors are of similar ages,” the authors found. “So too are the most successful founders in entrepreneurial regions of the US … Conditional on starting a firm, a 50-year-old founder is 1.8 times more likely to achieve upper-tail growth than a 30-year-old founder. This evidence is at odds with the conventional wisdom that successful founders skew younger,” the authors wrote.

Here’s Where Age Matters

Although the data doesn’t support a higher success rate among younger founders, venture capitalists do seem to gravitate toward them, the Kellogg study found. “Given that younger founders have substantially lower batting averages, the founder-age tendency in VC investments may be surprising,” the authors wrote. The mean age of VC-backed firms in entrepreneurial hubs is 39.5, but New York-based firms have the lowest age in this category at 38.7.

This may mean that VCs prefer to work with younger founders, at least when doing business in entrepreneurial hubs -- or it could suggest that they aren’t particularly strong at predicting success rates. Other theories suggest that perhaps VCs find that younger founders will sell their equity at lower prices, offering higher returns for the venture capitalists.

The other area where age appears to be of import is when it comes to a successful exit. The success rate on exit seems to decline after age 60, the Kellogg researchers found -- but that doesn’t mean the youth are winning in this category. “A founder at age 50 is approximately twice as likely to experience a successful exit compared to a founder at age 30,” the study authors noted. “A founder at age 50 is approximately twice as likely to achieve upper-tail employment growth compared to a founder at age 30.16.”

These Founders Were Over 40

Wondering whether you’ve heard of anyone who founded a company over the age of 40? Consider these five “older” founders:

  • Tony Fadell founded Nest at age 41
  • Arianna Huffington launched the Huffington Post at 55
  • Bob Parsons started GoDaddy at 47
  • Bill Porter launched E*Trade at 54
  • Chip Wilson founded Lululemon at 42

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