Bill Gates was 21 years old when he and Paul Allen incorporated Microsoft. Steve Jobs was 22 years old when he and Steve Wozniak founded Apple. Mark Zuckerberg founded Facebook in his dorm at Harvard.
Biographies of those tech billionaires who hit it big in their 20s have helped reinforce the concept that entrepreneurship is a young man’s game.
Not true. Such stories are the exception slightly than the norm.
Starting work at a young age can have some distinct benefits. First, it gives you much more time to fail, which happens to most entrepreneurs several times before they put all of it together and succeed.
However, overall, the study suggests that older age is associated with higher levels of entrepreneurial success.
This is an essential policy point for governments who want people to work (and pay taxes) longer, although the employment prospects of jobseekers decline significantly from around the age of 45.
Instead of simply investing money in “job readiness” programs or subsidies for employers to hire older employees, more needs to be invested in programs that support the demographic most definitely to successfully start recent businesses.
A growing, mature enterprise
My research from Bronwyn Eager (University of Tasmania) and Saskia De Klerk (University of Sunshine Coast) suggest that entrepreneurship in maturity – over 50 years of age – is growing faster than in any other age group in Australia.
About one third of all businesses that have been operating for lower than three years are run by mature entrepreneurs. (In total, mature entrepreneurs have founded roughly 380,000 firms with a turnover of roughly A$12 billion per 12 months).
Younger entrepreneurs have some benefits. As a group, they are healthier and tend to have fewer family responsibilities. They could also be less risk averse, often because they have less to lose. They may profit from others positively viewing them as “young.”
However, mature entrepreneurs have three key benefits: human capital, social capital and financial capital.
Our study surveyed over 1,000 mature entrepreneurs and cross-referenced the results with other entrepreneur research. Our findings indicate that older entrepreneurs have accrued business and life experience, knowledge and skills, social networks and resources that better prepare them for success. They tend to have better social skills and can regulate their emotions better than younger people.
They have a lower risk tolerance than younger entrepreneurs, but this is offset by other aspects equivalent to confidence in their very own skills and experience. Their fear of failure is subsequently lower than that of their younger counterparts.
The numbers are with them
Our study confirms previous research that found no evidence to suggest that younger entrepreneurs are more likely to succeed than middle-aged ones.
For example, Professor Pierre Azoulay and colleagues at MIT Sloan School of Management analyzed the data on 2.7 million founders of American firms between 2007 and 2014 that subsequently employed at least one person. The average age at founding was 41 years. For the “1 in 1000” growth firms, the average age was 45 years.
The authors conclude that “all the evidence suggests that founders are particularly successful when starting a business in middle age or older, whereas young founders appear to be at a disadvantage.”
Indeed, they found that the “average number of strokes” needed to create successful firms increased dramatically with age. A 50-year-old founder was 1.8 times more likely to achieve “upper tail growth” than a 30-year-old founder. People around the age of 20 had the lowest probability of success.
How the government may also help
Entrepreneurship may subsequently be a real alternative to unemployment among older people.
However, there is compelling evidence that aspiring mature entrepreneurs require specialized government support and incentives to each start and grow their businesses.
Government initiatives equivalent to Entrepreneur Program (formerly the Entrepreneurship Infrastructure Programme) and Entrepreneur Facilitatorsfor example, they might be better designed to take into account the specific needs of older entrepreneurs.
Such support will each enhance the success of those businesses and job prospects for young and old.