Most of the famous entrepreneurs we hear about are fairly young. We tend to read in the popular press about the Mark Zuckerbergs of the world and assume that all successful entrepreneurs launch businesses in their 20s. However, this couldn’t be further from reality.
Recent studies show that older entrepreneurs are increasing while the number of younger entrepreneurs is decreasing. According to the Kauffman Index of Entrepreneurial Activity, the share of entrepreneurs in the 55-64 age group jumped from 14.3 percent in 1996 to 23.4 percent in 2012. In contrast, the share of entrepreneurs in the youngest age group of 20-34-year-olds decreased from 34.8 percent in 1996 to 26.2 percent in 2012.
An article by the well-known scholar and entrepreneur Vivek Wadhwa in the Washington Post discusses a similar study in which Wadhwa found that the average and median age of successful founders from 1995-2005 was 39. He stated that twice as many founders were older than 50 as were younger than 25.
In a follow-up study, Wadhwa found that the average age of male founders in 12 high-growth industries was 40, and the average age for female founders was 41. He noted that the Kauffman Foundation, building on those findings, determined that the highest rate of entrepreneurial activity is in the 55-64-year-old group. Wadhwa attributed three motives for successful older entrepreneurs to start companies: they have ideas for solving real-world problems, they want to build wealth before they retire, and they like the idea of being their own boss.
I think another likely factor is the recent recession. Many older workers were the victims of layoffs and then age discrimination during job searches. They’re turning to entrepreneurship as an alternative to unemployment.
Consequently, many older entrepreneurs have different definitions of success for their businesses. They aren’t all shooting for the massive multimillion dollar exit. Instead, they’re trying to stay employed and (as Wadhwa noted) build or add to their nest egg for retirement and be independent. Many have worked in large corporations and bristle at office politics and rigid hierarchies, where good ideas go to die!
A more grounded outlook makes them more inclined to mitigate risk. Combine that with their years of experience and they are a lot more likely to avoid some of the most common pitfalls of startups. This is a huge benefit, as at least 90 to 95 percent of startups fail. Many don’t even get on the radar to be counted in the statistics, so the failure rate may be even higher. However, if you have more work experience, you’ve either made or witnessed the mistakes everyone tends to make—even if it wasn’t at your own company—and learned from those mistakes.
Another reason why we’re probably seeing an increase in older entrepreneurs is that entrepreneurship is “in the air” these days. When I was in college in the late 1970s, it was considered a less viable option because of the cost and time involved in building a company. But Web technology has dramatically driven startup costs down. Consequently, it’s often possible to bootstrap early-stage/risky businesses. That is enabling a lot of older folks who may have had entrepreneurial desires at younger ages to now pursue their dreams.
While the costs are lower, they aren’t zero, so it’s reasonable for older entrepreneurs to worry about spending their retirement money. However, it’s easier to raise money from investors when you have experience. Angels and VCs see a track record in business that a 22-year-old simply can’t bring to the table. Even if you haven’t launched a company on your own, you know about business and have a network of relationships, which increases investors’ confidence that you’ll spend their money wisely.
In light of these factors, the trend of entrepreneurs becoming older makes a lot of sense. It also makes sense that those older entrepreneurs are more successful than their younger counterparts. According to Krisztina “Z” Holly at Forbes, “twice as many successful entrepreneurs are more than 50 as under 25.”
Of course entrepreneurship isn’t for all baby boomers. Founders have to be willing to do anything and everything for their business, and it can be all consuming. You have to bring a lot of energy to a startup. If you’re cruising into your late 50s and want to put your feet up, then this isn’t the job for you.
The bottom line is that we should value and support entrepreneurs of all ages, as it’s not a privilege limited just to the young!