A new paper by researchers at MIT, Northwestern University and the U.S. Census Bureau dispels the classic myth that the best entrepreneurs are those who are quitting college and becoming tech wunderkinder in their twenties.
In fact, according to the research recently released, the average age of a successful entrepreneur is a bit older than you might think. You may begin to think differently about your entrance strategy when you discover what the optimal age to become an entrepreneur really is!
As seen in the recent post, A 9-Step Guide: Quitting Your Job to Become an Entrepreneur, older entrepreneurs can leverage networks, capital, and experiences to propel themselves to major business successes.
The researchers looked at census information about 2.7 million people who started a business between 2007 and 2014 and went on to hire at least one employee. The average age of such entrepreneurs was 42.
When looking at the top 0.1 percent of the fastest-growing companies founded and with at least one employee hired, they discovered the average founding age was 45.
The researchers broke the data down further by looking at founders with higher growth rates with certain characteristics and found that the early to mid-40s was also the average time for companies in high-tech fields (43), with venture capital backing (42) and patent applications (45).
Another component to success? Researchers discovered that entrepreneurs with some previous employment experience in the sector for their new business were 125 percent more successful than those without any experience.
At least one of the researchers was not surprised by the results and believes that the findings should cause 20-somethings and the venture capitalists who fund them to pause.
“In theory, we know that with age a lot of benefits accumulate,” said J. Daniel Kim, an MIT graduate student at the time of the study and co-author. “For instance, you get a lot of human capital from experience, you also get more financial resources as you age, as well as social connections, all of which will likely boost your odds of success as an entrepreneur.”
The researchers were able to compare census data to IRS records to correlate business growth while also accounting for exit strategies, such as sales or initial public offerings.
Older employees also dominate in their exits. According to the researchers, a 50-year-old company founder is 1.8 times more likely to create a highest-growth firm than a 30-year-old. Founders in their 20s? They are the least likely to have a highest-growth company.
The authors believe that outcomes are better with age for several reasons:
- Greater management experience
- Better and more in-depth knowledge of their industries
- More financial resources
- Better social networks
The stereotypes persist, however, and the authors encourage a change in the narrative about age and entrepreneurship.
At Benetrends, we agree and see countless examples of older entrepreneurs who find remarkable success in starting their own businesses.
Benetrends provides unique startup funding opportunities and support functions for entrepreneurs of all ages. To learn more about how Benetrends can help your business idea become a reality, watch the webinar: How To Use Your Retirement Funds To Buy A Franchise Or Business.