
Ask YC: Why do you disproportionately invest in younger founders? - dstorrs
Browsing back through the archives, I found this:<p>http://news.ycombinator.com/item?id=809233<p>I found the following thread interesting (quoted in part):<p>====== START QUOTE<p>5 points by jacquesm<p>[To pg] Are you willing to share the number of companies YC has invested in where founders were in their 20s, 30s, 40s, 50s or older ?<p>7 points by pg<p>I don't actually know the numbers. We don't keep track. But I know there haven't been any with founders in their 50s, and only 2 or 3 with founders in their 40s or their teens. Most founders are in their 20s or 30s. Completely guessing, I'd say 15-20% have founders in their 30s.<p>[...other posts and questions...]<p>10 points by pg<p>Off the top of my head, I'd say that older founders are more likely to succeed. They don't give up so easily. On the other hand, they also tend to have much higher burn rates, which make their startups easier for circumstances to kill.<p>====== END QUOTE<p>So, pg is essentially saying that 75-80% of YC's investment goes to founders in their 20s. But he also acknowledges that older founders are more likely to succeed.<p>I can see multiple possible reasons for this strategy...for example, if you are doing social investing, you might assume that older workers are already established and relatively safe, but those just starting out could use a hand.  Or perhaps you care more about disruptive companies than successful ones and you feel that, although older founders may be successful more often, they will be disruptive less often.  If, however, your goal is simply to make money, then it seems like you should be investing disproportionately in older founders.<p>So, what's the reasoning for your investment strategy?
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pg
The answer is a lot shorter than your question: we fund the best people out of
those who apply.

As far as I can tell, the age distribution of people we fund is the same as
the age distribution of applicants.

~~~
leif
Can you speak to why the applicant age distribution is so skewed?

I'd wager that older founders have more anchoring commitments, so while you
can draw on a large (geographical) pool of young founders, you can only draw
from the few older founders that happen to live near YC itself.

Of course, you have a lot more data, and probably a lot more insight into this
question.

~~~
bradhe
Pretty sure pg has said exactly the re: anchoring commitments (kids, mortgage,
etc.) with regard to startup success -- not just YC acceptance -- a couple
times before.

~~~
arn
...and this is a very big reason. If I was coming out of college I would
definitely apply to yc. just to be immersed in that scene I think would be
invaluable.

Even now, I'm financially secure, I still find it appealing, but uprooting my
family (wife+kids) for a few months is not something I am willing to do.

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byoung2
It's likely because most of the founders who apply to YC are in their 20's
(and to a lesser extent 30's) because they are in a better position to live on
ramen than older founders. Fresh out of college at 22, you are still used to
living in cramped living quarters, eating cheap, and staying up late. As you
get older, as you get used to full-time work, you get used to a better
standard of living add on expenses like cars, mortgage, and possibly a family.
I'm sure there are some who can do it, but it's harder to get a whole family
to live on ramen while you pursue a startup.

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Towle_
_It's (likely) not a strategy._ Other explanations exist. You need to know
more than just the age distribution of founders YC invests in. You also need
to know the age distribution of founders who _apply_ to YC. It's silly to
assume that the age distribution of applicants is unlike the age distribution
of those invested in if you don't have the data to make that claim.

If, for example, 20% of YC-invested founders are in their 30s and 20% of
applicants are in their 30s, then in all likelihood age is a complete non-
factor in their investment strategy. YC applicants are just disproportionately
likely to be younger, due to the fact that older people are more likely to
have financial dependents and commitments which make it far more difficult (if
not entirely impossible) to do the 3-month-long YC experience.

~~~
timr
I was thinking something similar. Not knowing anything about the actual
applicant demographics, my intuition is that they would skew younger.

From personal experience, the overlap of the sets:

1) of people over 30

2) of people who are entrepreneurial

3) of people who have actionable ideas

4) of people who are in a position to take income risks

5) of people who need the money/PR/connections that YC provides

is pretty small. There just aren't that many 30-something entrepreneurs who
are in a position to need what YC provides, and who are able and willing to
take a vacation from what is probably a substantial, stable income.

~~~
jon_dahl
From my perspective (early 30s), I know a ton of people who match all of these
criteria. Even 4 and 5. Savings (4) can cover income risks for a time, and as
it turns out, just about anyone can benefit from the PR and connections that
YC provides (5). (The money, however, is almost a non-issue.)

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jrockway
I think he answered your question. Burn rate. YC does not give out a lot of
money, and older founders probably burn through it too quickly to be
successful.

It's kind of like that betting strategy where you double your bet every time
you lose. If you have an infinite amount of money, you will always make your
money back. If you have a finite amount of money, well... you lose everything
very quickly.

Similarly, older founders may do well, but not before the money runs out.

(I had a coworker who was talking about a friends startup. Millions of dollars
worth of initial funding for a project that's very similar to something YC
invested in. If your $3000 investment fails, it's not a big deal. If your
$30,000,000 investment fails, you become very unhappy. Since most startups
fail...)

~~~
pg
We have had companies that have died quicker because they had high burn rates,
but we haven't yet let this consideration affect our investment choices.

~~~
jrockway
Interesting.

Is there some self-selection going on where founders that think they can do
more with less go for YC instead of someone else? Do people of the "first,
let's buy aeron chairs, then we can worry about deciding what to make"
mentality even know that YC exists?

~~~
pg
I think the main reason we get more applicants in their 20s is that the older
people are, the more difficulty they have getting _n_ cofounders to be free of
obligations all at the same time.

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jedwhite
I don't think the primary driver for any startup applying to YC is cash. The
value in YC or Founder Institute or Techstars or any of the other
accellerator/incubators is advice, mentorship, learning and connections, and
the implied social proof and credentialing provided by acceptance. It's easier
to live on ramen noodles in your twenties out of school. Having done gone down
that path, the sacrifices to do it with a family are almost impossible. It is
rough when your little kid looks up at you when the school lunch account is
overdrawn and says "I'm sick of being poor, Dad. When are you going to
launch?" So it makes sense for YC to focus limited funds where it can get the
best yield. Younger, highly intelligent males of extraordinary ability without
mates who are out to prove themselves and build social status and wealth often
do. That's why the crime rates are higher at younger ages too.

~~~
jedwhite
ps having said that, the young child in question's favorite foods do happen to
be ramen noodles and pizza, he is teaching himself python and wants to go to
MIT :)

~~~
jacquesm
Coolest comment ever :)

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gruseom
YC have answered this a zillion times. The demographics of who they fund are
the same as those who apply.

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gojomo
The question is inapproportionate!

Without info about the pool of applicants, you don't yet know if YC invests
disproportionately in younger founders.

And, even when compared to raw number of applicants, _if_ older founders are
underrepresented in those funded, that could be due to the universe of factors
other than YC's preferences. For example, the best older founder-types may
already be locked into other opportunities and obligations, making _good_
older founders underrepresented in the applicant pool.

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rnugent
Older founders are more likely to tell you to shove your advice. Hence
insecure investors choose an audience they can control more easily.

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danbmil99
because they spell so well [edit:] more seriously, older founders generally
have a network of potential investors. If they don't, that's probably a red
flag. Also, they tend to have more stable life situations (read: greater cash
needs).

So, they are not likely to benefit as much from either the cash or the
contacts YC provides.

~~~
Qz
I would think a more stable life situation would involve lesser cash needs...

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vaksel
it's because older people aren't as interested in doing startups(in
comparison)...and those that are have a lot more commitments that they can't
just get up and move to California for a YC session.

If you have less people applying, of course you'll have less people being
accepted.

~~~
mattmanser
Sorry, have to call this. Older people start businesses way more than young
people (example figure, avg age of a founder is 39 -
[http://www.businessweek.com/smallbiz/running_small_business/...](http://www.businessweek.com/smallbiz/running_small_business/archives/2009/06/entrepreneurship_the_new_mid-
life_crisis.html)).

It's just they don't need the relatively small amount that YC invests because
they have saved it themselves or have the kind of connections at that point in
life where friends/family can invest it instead.

Still, all the stuff YC does for a new business apart from the money is pretty
awesome. I'd apply just for that if I didn't mind moving to the US.

~~~
fgf
start business =//= start startup

business = plumbing, food stall, import/export, constulting, YC company etc.

startup = YC companies and other similar intense low odds/high reward
businesses

edit: vaksel stole my thunder

~~~
mattmanser
And I still think you're wrong. There's a young person centric round here
precisely because this is the YC site. But figures of just tech startup
founder ages are harder to find.

All I can now talk about is from personal experience. For example I know at
least 12 startup founders (meaning low cost, tech centric startups) in
Nottingham, working for 3 of those startups. None are/were under 25 when they
started their business. The majority of them were over 30. Only 2 had started
a previous business before 25. My friend has worked for 3 different tech
startups elsewhere. All had founders over 30. Most of these people were
married. Some had kids. They still started a business in the tech field.

Perhaps it's because the events and things I go to appeal to people my age,
and the events the younger founders go to appeal to a different age. But I
doubt it. What I suspect is that older people are probably more likely to go
into b2b, the less glamorous startups, because it's easier money and most of
these people knew the industries from working in them beforehand. And thus
relied on existing contacts and sales forces rather than techcrunch et al. for
publicity.

In fact it's almost impossible for an out-of-college/still-in-college founder
to enter b2b precisely because they have no experience of that business domain
or contacts in it. They can't see the opportunities unless they work in it.
The only business they might know is the startup one.

In the end, my point is the idea that older people have no interest in
starting tech-centric startups is wrong. It doesn't even make any sense. Do
you think older people are scared of tech or something?

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jacquesm
title typo: dispropriately -> dis-proportionally

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lzw
If you're managing your money reasonably well, and you're in your 30s, you
probably have $15,000 in the bank in cash. I've never applied to YC because
I've always had an order of magnitude more cash than YC typically invests.

People right out of college, or early in their careers who know they want to
do a startup, and who haven't had the time to put aside this level of capital
are the prime target for YC, and they are also likely to be younger.

~~~
crcarlson
A lot of people ask me why I applied to Y-Combinator in my 30's with cash in
the bank. For me it was because YC offers big picture perspective on internet
companies I could not get for a better price anywhere else. I also guessed
that the community would be good to know, like a business school class. Now
having been through a YC batch I can say the money provided was the least
significant benefit and that the advice and community turned out significantly
better than I had ever anticipated.

~~~
jacquesm
Which company was that?

Did you succeed at your goals?

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c00p3r
People in their 20s are much more willing to take risks and sacrifice comfort
and social life for a great idea.

It is good when it was their own innovative business idea, and not so good,
when someone else's one (look at politics!)

