In Startup Land, the Old Could Strike Gold

In the United States – unlike many other countries – as people age, they are often disregarded as being “out of it” or “too old to keep up with new technology.” This stigma runs rampant through the culture of this country, ignoring the value that years of experience can actually bring to a situation or even an industry.

When examining the activities of angels investing in new startups, age should be considered a significant asset. Business founders who bring industry experience and expertise to the table have a much greater chance of success than the young pup with the “next big thing.” This is not to say that young entrepreneurs have never succeeded. In fact, many have done much better than most anticipated – think eBay and Google. As most can assume, however, these companies are the exception and not the rule.

Challenging the Assumptions

In a recent TechCrunch article, the “young is better” assumption is challenged by those who firmly believe youth is wasted on the young. The author, Vivek Wadhwa, is an entrepreneur turned academic. A visiting scholar at UC-Berkley, Senior Research Associate at Harvard Law School and Executive in Residence at Duke University, Wadhwa reported on research recently completed by his academic team.

Based on a survey of 549 entrepreneurs in high-growth industries, the average founder of a high-growth company launched his or her venture at the age of 40. In addition, these founders are likely to be married and have two or more kids. These individuals are hardly the innovative 20-somethings with passion and no family distractions that Silicon Valley VCs tend to favor. Wadhwa suggested perhaps there is a connection between this habit and high VC failure rates.

The age assumption tends to run rampant throughout the investment arena, whether the investor is an angel or a VC. In following these assumptions, anyone over 40 might as well set out for retirement or plan to be merely an advisor, not a CEO or Founder. Is the assumption that if the individual was worth their salt they would have already launched a successful company? Or, is the individual too set in their ways to drive success and innovation?

Why Older Is Better

For those who happen to fall in the over 40 – or even over 30 – age range, there are some valuable arguments for trusting in the more seasoned entrepreneur. As Matt Mullenweg so perfectly stated, a good portion of those entrepreneurs in this age range succeed for a number of reasons:

•    They offer a lot of experience
•    They are more cautious
•    They are likely to have their own funding
•    They have nothing better to do
•    They have credibility with bankers and customers.

A Kauffman study showed that people age 35 and older actually have higher entrepreneurship activity rates. These “older” professionals have often actually worked in an area or sector where they developed an idea or simply got tired of working for someone else. With the economic crisis, many Baby Boomers may be seeking alternative employment opportunities. Not all will land the perfect startup, but the success and health of the economy will rely on these risk takers to lead the recovery.

As an angel investor, you know there is no magic number when it comes to the ideal age for an entrepreneur, although it is likely to be a consideration. Think about your own background and experience. Do you bring more to the table now than you did in your 20s? It is very likely the 40-something entrepreneur can offer much of the same.