When you see lots of pitches every week, listening to potential founders with a “break out” idea, you get to see (or at least, think you get to see) some patterns emerging. Sometimes the patterns are wishful thinking, other times they seem to be very clear.
In pre-seed and seed funding, the funders of founders, are taking an awful big risk investing in an idea. Some might even say, you are gambling. Like any good gambler, you start looking for patterns and, more importantly, you start playing the odds.
What gets you really thinking about the patterns, and whether they exist or not, is the question I get asked the most: “What are you looking for when making an investment?”. Like any VC or start-up funder worth their salt, my answer is probably not a lot different to anyone else: the founder, the team. What we are seeking to understand (sometimes of gut instinct more than anything else) is whether a founder has the drive, has the ability, has the will to see their vision through. Can a founder take the knocks, work the 100 hour weeks, pivot when required, adapt when needed and keep on going no matter what is thrown at them. Seeking out a founder with the “right stuff” is a non-exact science, and herein lies the rub: how can you find patterns in such a broad arena, when you are dealing with human beings?
At the risk of being accused of ageist, I believe that there are some very interesting differenced in the make-up of start-up founders of different ages. Whilst many people bemoan the lack of jobs for older people, I am starting to see that the start-up world is well suited to people who have been in the work force for 10-20 years. Here’s why:
Nearer 40:
– You have had many years of experience, you understand structure, process, team work and delivery to timeframes.
– After being through the corporate wringer, the motivation for succeeding in one’s own business is thus driven by a realisation of what awaits back in the corporate world if they fail at their own business. It is very motivating.
– People understand responsibility for their own actions and successes and tend to look more in the mirror, than out the window when things go badly.
– Life is moving on. As the late Steve Jobs proclaimed, “…there is no better motivator in life than death…” As we get older we see the wood for the trees, we see that we have limited opportunities to follow our own path and at a certain age people embrace the fact that they can take control of their own destiny. Why do you think divorce rates sky-rocket around the 40-year birthday mark?
– The fear of failure evaporates. There comes a point, after you’ve been knocked around a bit by work, by life, by people that life’s experiences culminate in the “fear of failure” being diluted or evaporating completely. The fear of failure holds many people back. Having said that, the fair of failure is also a pretty good motivator.
– One gains the foresight to temper youthful naivety against pragmatic reality.
Nearer 20:
– When you are bright eyed and bushy tailed, youthful naivety is an asset. You don’t fear the world, don’t even understand it enough to recognise that changing the world, or making a big impact in business takes an enormous amount of hard work and perseverance. For many, just making the leap and getting started is the tonic, and young people are not constrained by getting started.
– The mortgage malaise: Many of my friends have an idea, a great idea, a vision a dream, but they never take the leap. Why? They are constrained by the treadmill of bills; private school fees, mortgage payment, car payments, keeping up with the Jones’. This financial bind is not often prevalent for young people in their early twenties and again, that is enough empowerment to make the initial leap into start-ups possible.
– A lack of business experience means that many young founders I see are focussed on the technology and the software as the panacea and aren’t able to yet connect the dots between a great idea, great code and a great platform and execution of a strategy that enables their product to gain traction in the marketplace.
– You are technologically savvy and able to use technology for every facet of business and life.
– When we are young, we often think we know it all. However, our lack of experience, life lessons, commercial transactions means that young people often overestimate the importance of their idea for people in everyday situations, and often lack the clarity to understand how hard it is to knock an incumbent product or supplier of its perch, even if the underlying technology is better and the product is cheaper. People have time constraints and a life to lead, and young people don’t sometimes understand the family / time pressures and commitments that keep many commercial relationships we all have keep us in the passive mode of “status quo”.
40 is the new 20!
Obviously, you could create lists and lists of pros and cons for 40 year olds and 20 year olds, and for every rule, there will be multiple exceptions and counter-arguments. Again, I’m not trying to suggest that this a formula by which to back a founder. Far from it. What I am suggesting is that age does create a pattern in experience and thinking, and that is always worth keeping in mind.
I would be interested to hear your thoughts on whether you share a similar view, or think I am barking up the wrong tree. Let me know.
Tony Simmons
Founder and CEO
Mktplace Ventures – www.mktplaceventures.com
