The short answer to the above question is no. Surprised? Well you shouldn’t be. Let me give you the long answer on this always-hot topic for startups.
“Young people are just smarter,” said a certain Mark Zuckerberg in 2007. Yes, Mark, you may be right in some respects. But that doesn’t necessarily make them more successful entrepreneurs. According to recent US-based research from the National Bureau of Economic Research, indeed it does not.
That’s right. No, you do not have to be “young” to kill it as an entrepreneur or enjoy success with startups. Nor do you need to be based in or nearby San Francisco either. Refreshing news but not shocking. Why? Because the myth of the twenty-something former computer science grad founder on Sand Hill Road is exactly what it is. A myth.
For startups, age and location are irrelevant
We’ve previously said on our blog that something is wrong in Silicon Valley. I’m talking about the lost art of capital efficiency. Now it seems that trends, and perceptions, are (thankfully) changing. A paradigm shift is already in process. European tech startups, as well as from other regions of the world and from industries outside tech, are as healthy as ever. And investment in them is on the rise.
You no longer need to be in the Bay Area if you want access to the best networking opportunities. Knowledge is being decentralized at such a rate that location is becoming irrelevant. And so is educational background (i.e. non tech), and age with it. Investors are not looking simply for the next hot shot coder with a great idea.
The key findings from the National Bureau of Economic Research’s study, which is based on data between 2007-2014, are strikingly contrary to common perceptions and VC behavior. Especially when it comes to age. Just look at the below:
- The mean age of founders for any type of firm is 41.9
- Mean age of founders of most successful firms is 45
- Conditional on starting a firm, probability of success is at its peak between the ages of 45-59
So, what are they looking for?
Yes they are still looking for the next big thing in tech entrepreneurship. But the key point now is that they seem to be focusing more on industry expertise. The notion of leaning towards founders with a tech background is fading. Investors realize that to solve real problems related to any industry in a specific region, possessing the knowhow from that specific industry is key.
Data shows that VC investments have traditionally favored startups from young Bay Area founders. Back in 2014, the average Silicon Valley-based founder was 31. And the bias was toward founders with tech backgrounds.
But, as Venture Beat’s Zach Ferres pointed out, between 2010 and 2015, Bay Area VCs increased their investments outside Silicon Valley by a staggering 103 percent. And having a computer science degree is no longer a prerequisite.
How big is this paradigm shift?
I will be the first to admit that news like this is refreshing. It confirms what we believe and say (and have been saying). The number speak for themselves. In their study, the National Bureau of Economic Research point out that the average successful founder is 47. Yes, you read that right. Forty-seven.
The exponential way technology is advancing has given birth to a new era in entrepreneurship. And the best part is that VCs are no longer putting age, educational background or location top of their list of priorities. No. They are looking for great opportunities irrespective of those three things. They, like ourselves, are starting to look to invest in businesses that aim to solve deeply rooted problems in varying industries. Firms which aim to add real world value. And in industries that are both tech-focused and/or which have been slow to embrace technology.
Experience and expertise, as well as local knowledge
Why? Put simply, it’s because people who have many years of experience in a specific field, or who are from, or closer to, a specific region, are better equipped to innovate. Having a deep knowledge of tech is not enough anymore. This is why for example here at Starttech, we focus on a specific region, and on people who have a specific set of criteria to gain entry to our Venture Building program. Age and academic background are secondary. for our startups. Especially when you are looking for a sustainable business model. Because in the end, it’s business model that beats product. Every time.
When you think about it, it makes perfect sense. Investors are more open than ever to backing non-traditional founders who can navigate industry-specific challenges. The future is beyond the Silicon Valley “utopia”. Opportunities for new deal flows and exciting startups are everywhere. As an investor, you simply have to open your eyes.
If you are interested in investing in a new breed of startup, contact us to learn about the unique opportunities available in Greece and the East Mediterranean region.