Thursday, November 8, 2012

Do Older Or Younger Entrepreneurs Have The Greater Advantage?

A recent conversation with a young entrepreneur—followed by a closer look at some recent data—got me thinking. When it comes to starting a new business, who has the greater advantage? The 25-year-old upstart or the seasoned 52-year-old entrepreneur?

Forbes contributor Liz Kammel gives some interesting perspective in her recent article Start A Company When You’re 25–Not When You’re 52. Liz points out that the younger entrepreneur may have the greater advantage in many respects – 

1) you’re already fairly poor, 
2) energy and motivation will never be higher, and 
3) you have no fear about challenging the “status quo.” All great points. However, Liz cautions that if a young founder’s company succeeds in qualifying for a large Series A or B round of funding, the VC will most likely replace the entrepreneur with a more seasoned executive.

Consider this finding as well – The Kauffman Ewing Institute posted recent data on how 5,000 start-ups launched in 2004 have fared over time. The report says “firms surviving through 2008 were much more likely than firms that exited over the period to have primary owners older than age 45.”

Of the 5,000 start-ups in the study, 48 percent were started by founders who were 45 or older. However, a full 64 percent of the surviving companies were headed by entrepreneurs in the 45-and-up group. This is a fairly surprising result. Said the Kauffman report: “Previous industry experience and start-up experience had less impact on firm survival prospects than did owner age.”

In a recent interview with US News, Dennis Ceru, an Adjunct professor at Babson College in Wellesley, Mass, also noted that older people not only have a great deal of business experience, they also tend to have more financial resources than younger entrepreneurs.