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Do VCs have an age bias?

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Re: Do VCs have an age bias?

#11

Post by michaelochurch »

This tells us one of two things (possibly both). Either

    1. VCs have an age bias and don't fund older people, or
    2. VC is a raw deal and 40+ with successful careers avoid it.
We, however, don't know which is true (or both) unless we can see pitch success rates by age.

However, I'd guess that it's a mix of the two. The age bias probably isn't deliberate. The issue is that VCs aren't passive investors but active managers, and aversion to a younger-boss dynamic is nearly universal, with exceptions only made for obvious outliers. However, I also think that capable older people tend to be savvy enough not to enter the California VC-funded "tech" (actually, mostly marketing using tech) game. There are a lot of great 50-year-olds out there, but very few are interested in anything going on in the Valley these days.

Re: Do VCs have an age bias?

#12

Post by manishsharan »

Or it could be that 40year olds are more risk averse which leads to a smaller pool of 40 + entrepreneurs seeking funding. Or could it be that 40+ people have built a network of contacts that enables them to start businesses ,not startups, with little external funding. I see a lot of new businesses in advertizing, marketing and finance sectors which are profitable and pay good salaries and yet have never had the need to raise capital from VCs.

Re: Do VCs have an age bias?

#14

Post by rgbrenner »

PeterGriffin wrote: post #10

The reasons the graph is centered around 30s with a halo in 20s, 40s and 50s is the same reason the graph lacks "under 10" and "over 80". It's just how humans work. We get born, have a period of growing up, gaining experience, then a productive period with big bold dreams, then settling, retirement and death. I guess without the finger pointing the data would be so boring that it wouldn't warrant an article, so here…

The average business founder is aprox 40 years old. 2/3rds of surviving startups are by people over 40 years old. And this quote: The study also found that people over 55 are almost twice as likely to launch high-growth startups than those aged 20 to 34. http://www.forbes.com/sites/cherylsnappconner/2012/09/03/do-...

Of course, that doesn't mean this article is correct.. since it doesn't show how old the pitchers were. It's entirely possible there is no age discrimination, if older people just dont apply (perhaps it's a raw deal.. or perhaps they don't need the money, since they have resources of their own.).

Re: Do VCs have an age bias?

#15

Post by dohertyjf »

rgbrenner wrote: post #14
PeterGriffin wrote: post #10

The reasons the graph is centered around 30s with a halo in 20s, 40s and 50s is the same reason the graph lacks "under 10" and "over 80". It's just how humans work. We get born, have a period of growing up, gaining experience, then a productive period with big bold dreams, then settling, retirement and death. I guess without the finger pointing the data would be so boring that it wouldn't warrant an article, so here…

The average business founder is aprox 40 years old. 2/3rds of surviving startups are by people over 40 years old. And this quote: The study also found that people over 55 are almost twice as likely to launch high-growth startups than those aged 20 to 34. http://www.forbes.com/sites/cherylsnappconner/2012/09/03/do-... Of course, that doesn't mean this article is correct.. since it doesn't show how old the pitchers wer…

I was thinking that was the more interesting backstory when I submitted it, actually.

Re: Do VCs have an age bias?

#16

Post by dohertyjf »

ps4fanboy wrote: post #6

Trying to come to a conclusion with half the data is a waste of time.

Can you ever have all the data? Or are you just advocating for more? If advocating for more, agreed. And the author says it's not a complete dataset and also only shows the first touch by the company (ie when they first got funding). So it doesn't take into account repeat rounds as the founders age.

Re: Do VCs have an age bias?

#17

Post by ulfw »

drakaal wrote: post #3

Very few do. The difference in age of those receiving capital has to do with pitch ratios. When I was 18 I would have pitched for $100K that seemed like a huge sum of money then. That was a years salary back in 1997. Now if you want 25% of what ever I think is the next big thing you had better pony up $5M. Why? Because I could work a 9-5 Make $250k a year and live on $100k paying 2 devs $75k. Find a Partner to do the…

You earn 250K, pay no taxes whatsoever, keep 100K and divide the other 150K equally to two devs (who I assume might not pay taxes either)? Cool

Re: Do VCs have an age bias?

#18

Post by serge2k »

ulfw wrote: post #17
drakaal wrote: post #3

Very few do. The difference in age of those receiving capital has to do with pitch ratios. When I was 18 I would have pitched for $100K that seemed like a huge sum of money then. That was a years salary back in 1997. Now if you want 25% of what ever I think is the next big thing you had better pony up $5M. Why? Because I could work a 9-5 Make $250k a year and live on $100k paying 2 devs $75k. Find a Partner to do the…

You earn 250K, pay no taxes whatsoever, keep 100K and divide the other 150K equally to two devs (who I assume might not pay taxes either)? Cool

You forgot the part about zero overhead for those 2 devs and the business as a whole.

Re: Do VCs have an age bias?

#19

Post by porter »

manishsharan wrote: post #12

Or it could be that 40year olds are more risk averse which leads to a smaller pool of 40 + entrepreneurs seeking funding. Or could it be that 40+ people have built a network of contacts that enables them to start businesses ,not startups, with little external funding. I see a lot of new businesses in advertizing, marketing and finance sectors which are profitable and pay good salaries and yet have never had the need…

The vast majority of businesses being started aren't organized to go public or get acquired for $1 billion in 7 - 10 years. It's much more realistic to go from making $100-200k in salary, to owning your own business and making $200-500k per year, net. If you were 40+ with a family, what option would you rather choose? A pretty realistic shot at making $300-500k or a crapshoot at creating the next Google, compressed into less than 10 years of course because your VC wants his short term result to impress the next round of LPs.

Re: Do VCs have an age bias?

#20

Post by shacharz »

Is this data normalized by the size of each group somehow? Without normalization this chart shows nothing about the VC's 'absolute' preference. At best it shows how the VC's are compared between themselves, and even that is by assuming all the VC's see the same amount of startups at each age group - which I presume is also far from true.
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