“Age and High-Growth Entrepreneurship”

This weekend I read "Age and High-Growth Entrepreneurship" by Azoulay, Kim, Jones and Miranda. 

The authors use USA IRS, Census Board, and Venture Capital databases to systematically investigate the link between age and high-growth entrepreneurship. It is a nice piece of scholarship that leverages data that has only recently become available (2007-2014 vintage start-up and founder data coupled with 5-year firm employment growth stats). Their observations struck me as relevant to potential CSI entrepreneurs:

 

"successful entrepreneurs are middle-aged, not young. We find no evidence to suggest that founders in their 20s are especially likely to succeed. Rather, all evidence points to founders being especially successful when starting businesses in middle age or beyond."

 

"The mean founder age for the 1 in 1,000 highest growth new ventures is 45."

 

"we further find that the “batting average” for creating successful firms is rising dramatically with age… a 50-year-old founder is 1.8 times more likely to achieve upper-tail growth than a 30-year-old founder"

 

"Founders in their early 20s have the lowest likelihood of … creating a 1 in 1,000 top growth firm"

 

One of the ironic findings of the study is that, on average, the Venture Capital community bets on relatively young founders, apparently reducing their probability of backing top growth companies. 

 

At the VMS Venture fund, we prefer to bet with the odds, not against them. We will back CSI entrepreneurs who know their markets, have relevant experience, and have the ability to lead a highly competent team. We’ll encourage them to experiment rapidly, and we are ready to invest heavily when they find and an opportunity. I’m hopeful that we will produce more than our fair share of “1 in 1,000 highest growth new ventures”.