What is the effect of age on entrepreneurial dynamics? IntoTheMinds has realized research on 840 company founders throughout Europe. The aim was to understand how age influences the company’s launch and the entrepreneur’s confidence. The results confirm some insights but are also surprising in many ways. They also demonstrate that we must adapt entrepreneurship support policies to the age of the entrepreneur.
This research complements previous research on the effects of Covid-19 on company creation and female entrepreneurship.
Our conclusions in a nutshell
- Entrepreneurs’ confidence in the future decreases with age. 64% of entrepreneurs between the ages of 18 and 25 are confident or very confident, compared to 54% of those between the ages of 55 and 65
- As age increases, confidence in the success of one’s own company decreases. The youngest entrepreneurs are 20 points more confident in their success than their elders
- As the age of the entrepreneur increases, the likelihood of obtaining private financial support increases
- Entrepreneurs aged 55-65 are 4 times more likely to obtain private financial support of more than €50,000 than those aged 18-25
- The older you are, the more you mature your company idea. Only 35.7% of 55-65-year-olds launched their company in 6 months compared to 53.3% of 18-25-year-olds
- Logically, as age increases, the probability of having already created a company increases.
- Only 5.9% of 18-25-year-olds have already created a company compared to 23% of 46-55-year-olds
- The older the entrepreneur, the more likely they are to start a business alone
- About 3/4 of the entrepreneurs start alone, all ages combined
- Age has no impact on the entrepreneurial spirit
- The age of the entrepreneur influences different aspects of the start-up
- How does the entrepreneur’s confidence change with age?
- The effect of the entrepreneur’s age on the financing of the start-up
Starting a business is not an easy task. Beyond the idea, there are a thousand aspects to take into account. The entrepreneur must have many talents at the start and a particular strength of character to overcome the obstacles. Entrepreneurs often talk about resilience.
In this research, we analyze how age influences the significant decisions of company founders: when and with whom to launch, how to finance, and how to face uncertainty.
How does an entrepreneur’s age affect the launch of their company?
The first lesson of our research is that the “transition to action” slows down with the age of the entrepreneur. In other words, the time that elapses between the business idea and the actual creation of the company increases with the age of the entrepreneur.
While 53.3% of entrepreneurs between 18 and 25 years old start their business in less than 6 months, only 35.7% of 56-65-year-olds do so. With age, the company creator seems to control his impatience better.
Older entrepreneurs necessarily have more experience, which is reflected in the decreasing percentage of new entrepreneurs. While 23% of 46-55-year-olds have already started a company, only 5.9% of 18-25-year-olds have.
Another surprising result concerns the number of co-founders. The age of the entrepreneur seems to encourage entrepreneurs not to surround themselves with others. Indeed, we can see that the proportion of entrepreneurs starting up alone increases slowly with age: 83.3% are over 65 years old, and 74.1% are 18-25 years old.
If we exclude the over-65s, the proportion of “solo entrepreneurs” is relatively stable. Approximately 3/4 of the entrepreneurs start their businesses alone.
The confidence of the entrepreneur depends on his age
While the entrepreneurial spirit is not sensitive to age, the same cannot be said for confidence. The results show that both confidence in the future and trust in one’s success decrease with the age of the company founder.
While 63.7% of 18-25-year-olds are confident or utterly confident in the future, only 53.5% of 55-65-year-olds are optimistic. The graph below shows how confidence in the future gradually erodes with age.
More surprisingly, the same is true for confidence in one’s success. Here again, there are significant differences between the youngest and oldest entrepreneurs. Nearly 75% of 18-25-year-old entrepreneurs are confident in their chances of success, compared to only 53.5% of 56-65-year-olds. That’s 20 points that have evaporated.
Private financing increases with the age of the entrepreneur
The last aspect that we have analyzed is that of private financing, depending on the age of the entrepreneur.
On the one hand, we note that the proportion of entrepreneurs who access private financing (friends, family, banks, private investors) decreases with age. Thus, entrepreneurs between 56 and 65 are half as likely to have access to private financing as their younger siblings between 18 and 65 years old.
On the other hand, the amounts that are allocated increase with the age of the company creator. Among the entrepreneurs surveyed, 56-65-year-olds are almost 5 times more likely than 18-25-year-olds to obtain financing of more than 50,000€.
This research clearly shows that the age of the company founder has several effects. These are reflected in the choices made regarding the launch of the structure or in the state of mind of the company founder. The results are only correlations at this stage, but we can still put forward some hypotheses.
The “slower” start of the business activity among older entrepreneurs seems to us to be related to experience. A more mature person will be better able to temper their excitement and to think more calmly. Their expertise (especially in creating a company) dictates a cautious realism reflected in their confidence. The young entrepreneur, with less experience, is not yet able to appreciate the difficulties that await him and is more enthusiastic.
Experience also increases financial means, which may explain the lesser recourse to private financing. On the other hand, when these are necessary, an older entrepreneur will probably have less difficulty securing more significant sums.