In the glistening hilltops surrounding Nakuru, Ndung’u, a 52-year-old entrepreneur, navigates the city with a revolutionary idea for waste management. Ndung’u developed an eco-friendly system to transform waste into sustainable biofuel.
Despite its ingenuity, the project attracts scant attention and even less investment. Pitching his idea to potential investors at various forums, he faces an unexpected hurdle involving an evident anti-age bias. He does not fit the image of the fresh-faced innovator who will disrupt the market in the minds of most venture capitalists and angel investors.
Several industry awards have recognised Ndung’u's innovation. Yet, he finds it difficult to break through the perceptual barrier that age dictates ability.
His experience epitomises a problem often swept under the carpet – the unfounded yet prevalent bias against seasoned entrepreneurs in favour of their younger counterparts.
Research by Pierre Azoulay, Benjamin Jones, Daniel Kim and Javier Miranda seeks to shatter the age-old myths surrounding entrepreneurship. The study reveals that successful entrepreneurs in the US, as an example, generally fall into the middle-aged category, with an average age of 45 for those at the helm of the fastest-growing new ventures.
The findings hold consistent even in high-technology sectors and entrepreneurial hubs, putting to rest the widespread notion that youth serves as the crucible of innovative disruption.
According to the research, older entrepreneurs bring to the table substantial human, social and financial capital, a cocktail of traits that often leads to success.
Familiarity with specific industries significantly predicts entrepreneurial victory, further validating the argument for experience over youth.
Despite the occasional success stories of younger entrepreneurs like Bill Gates or Mark Zuckerberg, the research suggests ageism in venture capitalism needs reassessment.
Another study by Hao Zhao, Gina O'Connor, Jihong Wu and GT Lumpkin paints a nuanced picture of the relationship between age and entrepreneurial success. Their research presents a weak but positive correlation between age and overall entrepreneurial success.
Interestingly, the research indicates a U-shaped relationship in that younger entrepreneurs tend to find less success compared to their older counterparts, and the likelihood of success increases for female entrepreneurs as they age.
Success metrics
The study also highlights that while age negatively impacts growth, it positively influences subjective success, firm size, and financial achievements.
The study reveals that success metrics differ considerably across age groups. While younger entrepreneurs may face setbacks, especially in terms of growth, the research shows they can achieve success in specific areas like innovation and disruptive technologies.
Young entrepreneurs should therefore diversify their measurement of success and not solely focus on growth parameters, considering the unique traits and resources they bring to their ventures.
For older entrepreneurs, the studies signal good news. The research shows that older entrepreneurs generally find more success in terms of financial stability and firm size. Older entrepreneurs should leverage their social and financial capital and their extensive industry knowledge to push their ventures toward greater success.
Zhao's study adds layers to our understanding by showing that both younger and older entrepreneurs have unique strengths and opportunities.
Investors, meanwhile, would do well to recalibrate their evaluation criteria for potential ventures. Acknowledging one’s own age biases rather than adhering to the Silicon Valley playbook, which tends to idolise youth, venture capitalists should pay attention to the merits of funding older entrepreneurs, who often bring seasoned experience and a well-rounded skill set to their businesses. Assessing entrepreneurs based on their ideas, experience, and capabilities rather than age could lead to more balanced investment portfolios.
Have a management or leadership issue, question, or challenge? Reach out to Dr Scott through @ScottProfessor on Twitter or on email at [email protected].
