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Published 01 March 2013 10:56, Updated 01 March 2013 13:56
According to the Kaufman study, fewer than 20 per cent of those entrepreneurs surveyed were aged in what for many are the peak hoodie-wearing years of 18-29. Photo: Fairfax Media
A new Kauffman Foundation study gives a fascinating snapshot of America’s early-stage start-ups and belies the notion that the smart new enterprise is the preserve of upstart youngsters in jeans and hoodies.
In fact the study reports that half of its respondents were aged 30 to 49, with fewer than 20 per cent in the 18-29 age group.
Online document service LegalZoom and the Ewing Marion Kauffman Foundation surveyed 1431 business owners who formed their companies using LegalZoom’s services in 2012.
Source: Kauffman Foundation. All figures in US dollars.
The average age of the entrepreneurs is reflected in other statistics collected by the study, which says 57 per cent of respondents had six or more years of industry or work experience before starting out, while 41 per cent had more than 10 years experience.
Most start-ups – 80 per cent – got going with funding from the founders’ own pockets, rather than external sources such as investors, banks or loans from friends and family, the study finds.
It also reports 60 per cent of entrepreneurs spent more than six months working on their ideas before getting under way.
The Kauffman study, conducted in partnership with LegalZoom, aimed to capture information about brand new start-ups that had often not even incorporated. This sector of the entrepreneurial economy was under-reported in most data, the study’s authors say.
“One of the great frustrations of entrepreneurship research is the difficulty of obtaining current data,” they say. “Most official statistics on business creation are several months or years old by the time they are released.
“This frustration with data collection is compounded by the inability of policymakers and others to get a grasp on who is starting companies and the challenges they face.”
The self-funded nature of many ventures highlights problems that entrepreneurs have getting access to credit and reflect a major obstacle in the path of many new enterprises, the study’s authors say.
“With 80 per cent of early-stage business owners using personal funds to finance their companies, founders are decidedly willing to take on risk,” LegalZoom chief executive John Suh says in a statement.
“However, these business owners need additional financing if they are to succeed in helping drive our economy forward. Of the 60 per cent of respondents who said they faced business difficulties, 45 per cent cite lack of access to credit.”
About a third of start-up owners in the survey were women. Among those that had master’s or doctoral qualifications, women were more representative than men.
Women’s representation in businesses with up to $US49,000 in revenue was broadly in line with the survey’s overall gender balance, at 33 per cent. The proportion of women in the $US50,000 to $US99,000 revenue bracket was 27 per cent, but fell dramatically in the $US500,000 to $US1 million segment, where women comprised only 6 per cent of the total.
The study’s authors also found women’s representation hollowed out in the middle of the age brackets it surveyed.
“Compared to the overall sample, women have higher representation among the 18 to 29, and 50 to 59 age categories, while men, relative to the total sample, have greater representation in the 40 to 49 and 60-plus categories.