So many boomer entrepreneurs these days, so little venture capital interest. Despite a growing number of boomer entrepreneurs starting up businesses, investors like the very public Vinod Khosla refuse to believe in funding companies started by people over the age of 35. He not only does not seem to recognize the age advantage that older entrepreneurs may have, he seems to get a kick out of letting us know – first from a podium in Bangalore, no less – and if we didn’t get it in late 2011, he says it again at the Churchill Club in September, 2012. His point? “The older a person gets, the longer it takes to adjust to change.” People over the age of 45, he says, are noticeably slower in adopting new tech than, say, teenagers. Interesting observation! At 27, he was a cofounder of Sun Microsystems, back in those early days of VC hope and optimism. He is now a very wealthy boomer at age 57. Ironic, too, that 47-year-old boomer and former Sun Microsystems CEO Jonathan Schwartz (well past Khosla’s definition of youth) founded CareZone earlier in 2012 to address gaps in the elder caregiving market. Makes one wonder if Khosla would reject the idea of investing in Schwartz’s start-up just because of Schwartz’s age! Let’s ask – is it wise and thoughtful to listen to someone like Khosla who seems to be channeling his young self?
Boomers have the money and experience – do they start companies? As it turns out, the highest rate of successful entrepreneurship, according to the Kaufmann Foundation, is among those 55-64 – twice the success rate of those age 20-34. According to a Newsweek article, their “start-ups get less recognition in the press, but they tend to involve more complex technologies like biotech, energy, or IT hardware. They also tend to sell products and services to other businesses, which consumers rarely see but which do most of the heavy lifting in powering innovation and economic growth.” That means that they understand channel strategy, something that may elude the 20-somethings who are coding away in their garages. And more to the point, they simply do not have the business relationships established that are the foundation for cultivating channel/distribution partnerships. And if you’re interested in solving Big Data challenges at an Enterprise level, it helps if you’ve actually experienced the challenges of working in an Enterprise.
So what’s up with boomer entrepreneurs? Duh, they’re succeeding. The Wall Street Journal was so taken by this trend that their Smart Money arm began profiling them last year in a column called Second Chances. Here at AARP, we have launched an online resource for 50+ entrepreneurs and we are exploring additional tools, resources, online communities, and off-line meet-ups and courses because, unlike the Silicon Valley Venture Capital club, we actually believe in and encourage this great potential. These success stories, like those highlighted in the Smart Money column, are too often under the radar of tunnel-vision VCs. This is likely a result from not looking around to see what light their age-narrowed lens shuts out.
The venture community’s investments should transcend age. VCs, for whom most bets fail, including those of Khosla Ventures, need to vary and broaden their Valley-centric perspective and search for great new business ideas from the 50+ entrepreneurs who would be pleased to describe them. They need to understand that 50+ entrepreneurs may have the most discretionary money to invest, the connections and work experience to execute, plus the motivation and drive required to start a business that works. As a result, they will create wealth. These are entrepreneurs on stage at DEMO pitching their ideas. They are start-ups in the incubator classes of Rock Health, Startup Health, and Healthbox. And they are the start-ups that have received VC and angel investment in brain fitness, aging in place technology, e-commerce, Internet travel sites, financial services and other verticals. Sectors where boomers and older people account for over 50% of total consumer spending are ripe for disruptive innovation, but continue to be underserved. Those VCs who are paying attention to these start-ups could play a role growing these companies to even greater wealth … and profit.