Your age and lack of experience may be the reason why your startup is not funded
In the last article from the Founder Profile Research (subscribe here for access), we put together a report for you that shows a clear investor bias towards funding founders who belong to premier education institutes or have a management degree. But just looking at the education degree of the founders may not give us the complete picture.
In this article, let us explore the funding trends in terms of the age and the work experience of the founder.
Unlike founders at Silicon Valley, most founders in India don't have stellar work experiences that come from developing products at companies like Facebook, Google or Microsoft or even from having worked as one of the first employees at a high-growth startup. But the early generation of Indian internet startups is expected to become a breeding ground for the next generation of startup founders.
We have gathered data on companies that got seed/angel/series A investments in the last three years (reports here 2011, 2012, 2013) and looked at the patterns that have emerged regarding the CEOs of the companies that got funded in this decade (till Dec 2013).
Why only CEOs? Startup teams come in all shapes and sizes. That is why we decided to focus only on the CEO of the companies.
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How much experience do you need to become an investor’s darling?
As clearly evident, young founders are liked but that may also be because majority of tech startups are started by younger generation. However, one interesting trend that we have unearthed is that investors have a clear preference for mature founders with more than five years of experience.
The reasons behind this can be multiple. Experience in managing teams and products go a long way in bringing efficiency and discipline to the teams. Also, experienced founders tend to have their own networks which they can effectively use towards building a support system for their startup.
Note: Experience has been counted from the year the CEO graduated with the first degree. Second degree is counted as work experience just to keep the standards uniform for the purpose of this research.
Where were the founders working before starting up?
One thing that took us by surprise was an extremely low number of founders from the big-name software services companies.
Out of 123 deals that we examined,
- 40 founders had experience in working with web/mobile technologies.
- Only seven CEOs have come from one of the big IT services giants.
Interestingly, 5 out of 7 founders from big IT services giants are from Infosys.
On the other hand, among the multinational giants, Yahoo! alumni have a really impressive record. Among the 40 founders with web/mobile industry experience,
- 5 of them are Yahoo! alumni.
- Google and Oracle each has one CEO as an alumnus.
However, there is hope that last generation of startups which made it big will create more and better entrepreneurs with better chances of succeeding.
According to a research done by Kauffmann Foundation, second time entrepreneurs have a 40% better chance at succeeding with their businesses when compared to the first time entrepreneurs. Not surprisingly, 28 out of the 123 companies that raised funding has a CEO who has been through the grind of a startup life either as an entrepreneur or an early employee of a startup.
Conclusion: If you are in your 30s with a premium education institution tag, you could be an investor's darling. Got an idea, don't worry much about it and take the plunge. Investors are there to ride with you more than anyone else (at least statistically!)
What do you folks think? Have you felt that there is a VC bias towards age of the founders? We’d love to hear your thoughts. Do comment.
This is the second part of our research. Stay tuned for more on founder profiles where we dissect where the sweet spot for each of the early stage fund lies?
For access to the full report, you can subscribe here.
About the author:
Manan is Co-Founder at Vozeal, a contextual video targeting technology. He is a graduate of IIT Kharagpur. While he is not hustling at Vozeal, he can be found at coffee shops in Bangalore reading a book.
