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February 09, 2020 | Tom Ballard

PART 3: Panelists comment on success of younger vs. older entrepreneurs

(EDITOR’S NOTE: We continue our annual “Investor Outlook” series by asking about a recent study by a team of researchers at the Massachusetts Institute of Technology  that investigated the connection between age and high-growth entrepreneurship, and their findings suggested that successful entrepreneurs are middle-aged, not young.)

It seems that we spotlight younger entrepreneurs in, but that could be because of the universities in East Tennessee that have strong support programs. What has been your experience in terms of the age range of entrepreneurs with whom you are interacting, and has it changed over the decade? Are those that are closer to middle age more likely to succeed?

  • Tony Lettich, Managing Director, The Angel Roundtable. In general, we would tend to agree with the MIT study that the probabilities of entrepreneurial success may be slightly higher for middle-aged entrepreneurs as they may be as passionate, driven and coachable as their younger counterparts, but also have potentially had the additional experience of having participated in a start-up previously. However, if such a connection exists, it does not color our view on the entrepreneurs or start-ups in which we engage. The Angel Roundtable, engages and invests in entrepreneurs of all ages, from college students to seniors. We simply seek innovative, passionate, driven, coachable entrepreneurs who demonstrate the potential to execute creative problem-solving solutions, regardless of their age. We have and continue to experience success from entrepreneurs of all ages.
  • Partner Courtney Watson responded for the Chattanooga Renaissance Fund (CRF). Since its founding in 2010, the CRF has looked for opportunities to support strong founders and teams with innovative business solutions. In our earlier days, we collaborated with accelerator programs to help source investment opportunities. This approach provides the benefit to review many companies in an efficient manner. However, since the structure of these type programs typically run for three months over the summer, they naturally draw younger participants with the ability to temporarily relocate and are more difficult for founders with families or other considerations. Robust networks and partnerships help augment paths to engage with a diverse group of entrepreneurs. In reflecting upon our portfolio companies, there is not one story to tell. We have companies that have continued to grow and receive additional funding that are led by more experienced and older founders as well as some led by younger founders. What we do see are certain qualities that transcend age that help lead to greater likelihood of success such as strong communication skills, responsiveness, flexibility, openness for continual learning, and more.
  • Brandon Bruce, Entrepreneur-in-Residence with Greater Sum Ventures. I’ve enjoyed working with entrepreneurs this year that range from 16-year old Sofia Tomov at Qardian Labs to founders who recently retired and are starting new companies. Young founders benefit from pitch competitions, support from institutions of higher education, and growing-up with new technologies and business models. Middle age founders benefit from experience, connections, and personal start-up capital. The success of entrepreneurs and their companies could be measured in a number of ways – capital investment, intellectual property, experience, revenue, employees, earnings, etc. Regardless of how success is measured, it’s available to founders of any age.
  • Ken Woody, President and Partner, Innova Memphis. We get some really high talent younger entrepreneurs here due to the university. They are more willing to take a risk in starting a business since many don’t have the challenges of family financial obligations. But they also don’t have the experience of older entrepreneurs who may have worked in the field previously and have seen many of the pitfalls that happen in the business world. On the flip side, a lot of the younger founders haven’t learned all the wrong ways to do business, too, and tend to be more open to coaching and mentoring. I like the older founders for experience, network and product/sector knowledge. I like the younger founders for passion, novelty in approaches and coachability.
  • Kristina Montague, Managing Partner, The JumpFund. We have a range of age in our portfolio, though our first exit was with a very young (24-year old) Black female. Having some level of maturity on a team, Founder/Chief Executive Officer or not, is always beneficial.
  • John Morris and Geoff Robson, Fund Managers, The Lighthouse Fund. We don’t think age plays a role. The key is connecting an idea with a customer and getting them to pay for it (step 1). After that, there are a lot of factors at play. Middle-aged entrepreneurs have more experience, so they know what works and what doesn’t. However, if the idea isn’t good or there aren’t a lot of customers, then how the company is run doesn’t matter. Our experience has been with a wide age range of entrepreneurs, but the common factor is their drive to make the idea successful.
  • John Bruck, Knoxville-based Member, and Scott Jacobs, Executive Director, Queen City Angels (QCA). We don’t analyze the age of founders versus success rate, but it is apparent that middle-age founders/teams are more prevalent in our deal flow. We also believe that more experience, particularly management and financial, leads to a higher success rate. On the flip-side, an early stage team’s inexperience can be a risk. Additionally, more experienced teams are benefitted by mental and emotional toughness, having gone through adversarial situations like economic downturns, litigation or termination of employees.
  • Grady Vanderhoofven, Founder, President and Chief Executive Officer, Three Roots Capital. For the past 20 years and continuing through today, we interact with entrepreneurs ranging from early-to-mid 20’s to 60’s. We’ve had the most and best success with 40 plus year old entrepreneurs who have high energy coupled with a wealth of knowledge and experience and a willingness to remain teachable.
  • Eric Dobson, Chief Executive Officer, Angel Capital Group. I think it has shifted to a younger demographic because of the university involvement and prevalence of entrepreneurship resources. I think this indicates a net gain of entrepreneurs entering the market, not a decrease of more mature entrepreneurs. The question is do these younger entrepreneurs have the life skills and experience to create and run great companies?

NEXT: New funds have emerged in the last decade. What was the impetus?

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