How Education & Age Affect Tech Entrepreneurship

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How Education & Age Affect Tech Entrepreneurship

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If you think that your lack of a top-tier university degree might hamper your entrepreneurial success, think again. A recent study of tech company founders indicates that where you get your degree may not matter in the least. What’s important is simply the possession of a higher degree.

And if you’ve been haunted by thoughts that you should have fulfilled your dream of starting a company years and years ago—back in your twenties, say—don’t despair. The same study indicates that twice as many startups are founded by people in their fifties as opposed to youngsters.

The study, “Education and Tech Entrepreneurship,” was conducted by three scholars imbued with Ivy League credentials: Vivek Wadhwa of Duke University and Harvard Law School; Richard Freeman of Harvard University, Harvard Law School, and the National Bureau of Economic Research; and Ben Rissing of Harvard Law School and Duke University. The study was published as a Small Research Projects Paper by the Ewing Kauffman Marion Foundation, the world’s largest foundation devoted to entrepreneurship.

The researchers looked at the educational background of 652 U.S.-born tech founders from 287 unique universities. The top ten institutions in this group (listed below under the first bullet) accounted for only 19 percent of the entire sample. In other words, 81% of the tech company founders came from non-elite schools. Ivy League schools represented a mere 8% of the sample (which is a bit more impressive when you consider that those schools account for only 1.6% of American graduates each year).

But it’s the difference between those with—and without—a college degree that is really striking. The average sales revenue of all startups was around $5.7 million, with those companies employing an average of 42 workers. Startups established by tech founders with Ivy League degrees had average sales and employment of $6.7 million and 55 workers, respectively. The success of these two groups markedly contrasted with startups founded by those with only a high school degree, which had averages of $2.2 million in revenue and 18 employees.

Also surprising is another finding of the study: twice as many U. S.-born tech entrepreneurs start ventures in their fifties as do those in their early twenties—and the average age of tech company founders was 39. Only 1% of founders were teenagers. On average, tech founders have sixteen years of work experience at startup time. All of this flies in the face of a common though apparently mistaken belief about tech companies being founded by young entrepreneurs. As the study states: “The twenty-year-old wunderkind is the exception, not the rule.”

These findings definitely make exceptions out of Apple co-founders Steve Jobs and Steve Wozniak, as well as Microsoft Founder Bill Gates, don’t they? Jobs and Gates only possess a high school diploma, although Gates famously dropped out of ultra-elite Harvard to found Microsoft. Jobs attended Oregon’s Reed College for one semester, and for a while after that audited classes. Wozniak dropped out of U. C. Berkeley in 1975 to work on the first Apple computer, but returned in the 1980s and ultimately received a BS in EECS. And, as everyone knows, all three were quite young when they founded their companies: both Jobs and Gates were 19; The Woz was (and is) 5 years older.

Here are some other key findings:

The top ten universities from which U.S.-born tech founders received their highest degrees in the sample are Harvard, MIT, Pennsylvania State University, Stanford, University of California- Berkeley, University of Missouri, University of Pennsylvania, University of Southern California, University of Texas, and University of Virginia.

The vast majority (92%) of U. S.-born tech founders held bachelor’s degrees. Additionally, 31% held master’s degrees, and 10% had completed PhDs. Nearly half of all these degrees were in science-, technology-, engineering-, and mathematics-related disciplines. One-third were in business, accounting and finance.

U.S.-born tech founders with Ivy-League degrees tend to establish startups that produce higher revenue and employ more workers than the average. Startups founded by those with only high school education significantly underperform all others.

Nearly half (45%) of startups were established in the same state where U.S.-born tech founders received their education. Of the U.S.-born tech founders in our sample receiving degrees from California, 69 percent later created a startup in the state; Michigan, 58 percent; Texas, 53 percent; and Ohio, 52 percent. In contrast, Maryland retained only 15 percent; Indiana, 18 percent; and New York, 21 percent.

Download the free 16-page study, which contains a good deal of helpful and insightful data.

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