How Does the Average Age of the Founders affect Startup Value?
Did you know that there is a clear relationship between the average age of entrepreneurs and the venture's value?
Having Fewer Founders is Better for the Founders. Therefore, the answer is simple - no more than two founders.
The US statistics show that the average age of entrepreneurs when setting up their venture is their 40s. The exact age may vary depending on the industry of the business.
if the founders' average is 45 years, the venture's value is the highest
Industries like biotechnology or oil and gas are characterized by 47-year-old entrepreneurs, on average. For local businesses, such as restaurants, the average reduces to 42. Most of these local, new businesses had intentions to grow large.
The big question is - what about the high-tech industry? Even among the high-tech founders, the average age was the early forties. But it varies across sub-industries.
In software startups, the founder's average age is 40, and younger founders aren't uncommon. In contrast, the average age is much lower in IT industries, such as social media.
These statistics are for all founders. But what about the most successful startups? The companies with the highest values? Looking at most successful firms, the average founder age tends to be middle-aged, not young.
Why is the relative advantage of middle-aged entrepreneurs that yields the highest value? The simple answer is work experience. Even the most talented younger founder has no work experience. Founders with at least three years of prior work experience in the same narrow industry as their startup are 85% more likely to launch a highly successful startup.
The conclusion is that if the founders' average is 45 years, the venture's value is the highest.
Why Do Older Entrepreneurs Outperform Younger Founders?
The conclusion from what was said in the previous paragraph is that older entrepreneurs will have higher chances of succeeding. Why actually?
The secret probably lies in their better starting point. The starting point is expressed in knowledge, connections and money.
Older entrepreneurs have gained a lot of experience in their field. They encountered problems and learned how to deal with them successfully. They can use this knowledge and expertise to build a better society.
They have gained connections that will help them open the right doors. The connections can help them get better deals and better customers. After all, they know potential customers; if they don't, their acquaintances do.
They have accumulated some capital, allowing them a better starting point than young entrepreneurs. The capital will allow them to launch the initial product faster and invest the capital, however little it may be, in marketing the product or anything else.
The conclusion is that knowledge, connections, and capital will allow them to increase their chances of success.
