
Do VCs have an age bias? - dohertyjf
https://modeanalytics.com/benn/reports/211f54949c00
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drakaal
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 same, and we could have 4 devs, a CEO and
a CTO that both worked 25 hours a week and have a company that did just fine.
Until the partner and I were needed 40 hours a week, and we jumped ship
knowing we had revenue to support us.

The big thing that youth brings is optimism. The big thing that age brings is
experience. When you are 18 you think that if you had $50k you could change
the world, so you ask for it. When you are 35 you think if you could have 5
years and $5m you could change the world.

It is harder to get $5m than $50k so fewer do. 35 year olds are also less
likely to think that a 6 month old start up is worth $1B so they are less
likely to get that kind of offer.

I don't think it is about age it is about Risk vs Reward, and the way people
at different stages of their lives will run a company.

~~~
ulfw
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

~~~
serge2k
You forgot the part about zero overhead for those 2 devs and the business as a
whole.

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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.

~~~
porter
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.

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notacoward
It would be very interesting to see a scatter plot of average founder age vs.
success rate for each VC. Throwing money at very young founders with zero
track record and throwing it at very silly/strange ideas are both high-risk
strategies, likely to produce more losses than average but also some
potentially bigger wins. I'd expect to see the two correlated, but even if I'm
wrong it would be interesting to see.

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woogle
Very interesting graphic, but without the pitchers age we can't know if VC
have an actual age bias.

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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.

~~~
mathattack
I also would like to see some kind of normalization about the rounds they
invest in.

~~~
bennstancil
Filtering by round makes the sample pretty small, but here's the same graphic,
only including A rounds.

[https://modeanalytics.com/benn/reports/63dde3f90f6c](https://modeanalytics.com/benn/reports/63dde3f90f6c)

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bennstancil
(I made the graphic) - Unfortunately, there's obviously no data on the pitches
that VCs see. There could be ways to halfway infer it - for instance, founder
age tends to be different by industry
([https://modeanalytics.com/benn/reports/a43fb710b2ef](https://modeanalytics.com/benn/reports/a43fb710b2ef)).
If you look at how one VC's investments in one industry differs from overall
investments in that industry, you might be able to somewhat control for the
different pitches VCs see. But without more complete data, drawing any
conclusions beyond things like "YC founders are young" is tough.

On a related note, here's something else I wrote that looks into whether or
not older founders perform better: [http://blog.modeanalytics.com/are-
experienced-founders-bette...](http://blog.modeanalytics.com/are-experienced-
founders-better/)

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onion2k
This probably just reflects who pitches for investment.

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ps4fanboy
Trying to come to a conclusion with half the data is a waste of time.

~~~
dohertyjf
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.

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known
"Experience is the name everyone gives to their mistakes." \--Oscar

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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.

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PeterGriffin
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 we go.

~~~
rgbrenner
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-...](http://www.forbes.com/sites/cherylsnappconner/2012/09/03/do-
older-or-younger-entrepreneurs-have-the-greater-advantage/)

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.).

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

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jwblackwell
I would have expected to see more bias towards under 30's. Perhaps it's just
the way the graphic is laid out though.

