Study Challenges Popular Perception of Founder Makeup of Technology and Engineering Companies

Challenging the perception of American technology entrepreneurs as 20-something wunderkinds launching businesses from college dorm rooms, a new study by the Ewing Marion Kauffman Foundation and researchers at Duke and Harvard universities reveals most U.S.-born technology and engineering company founders are middle-aged, well-educated and hold degrees from a wide assortment of universities.

In fact, twice as many U.S.-born tech entrepreneurs start ventures in their 50s as do those in their early 20s. Further, elite, highly ranked schools are over-represented in the ranks of these founders, and Ivy-League graduates achieve the greatest business success; however, 92 percent of U.S.-born founders graduate from other universities, according to the study, Education and Tech Entrepreneurship. The study analyzed U.S. engineering and tech companies founded from 1995-2005, representing the most current decade of data.

U.S.-born engineering and tech company founders are overwhelmingly well-educated. While there are significant differences in the types of degrees these entrepreneurs obtain and the time they take to start a company after they graduate, the study reveals a direct correlation between a founder’s education and company performance.

In 2005, the average sales revenue of all startups in the sample was around $5.7 million, employing an average of 42 workers. Startups established by founders with advanced Ivy-League degrees had higher average sales and employment – $6.7 million and 55 workers, respectively. The success of these groups contrasted sharply with startups established by founders with high school degrees with average revenues and employees at $2.2 million and 18 workers, respectively.

Among other findings:

--The average and median age of U.S.-born founders was 39 when they started their companies. Only about 1 percent of U.S.-born founders of tech companies were teenagers.

--The vast majority (92 percent) of U.S.-born tech founders held bachelor’s degrees, 31 percent held master’s degrees, and 10 percent had completed PhDs. Nearly half of these degrees were in science-, technology-, engineering- and mathematics-related disciplines. One third was in business, accounting and finance.

--U.S.-born tech founders holding MBA degrees established companies more quickly (13 years) than others. Those with PhDs typically waited 21 years to become tech entrepreneurs.

--The top 10 universities from which U.S.-born tech founders received their highest degrees are Harvard, Stanford, University of Pennsylvania, MIT, University of Texas, University of California-Berkeley, University of Missouri, Pennsylvania State University, University of Southern California and University of Virginia.

--Nearly half (45 percent) of the tech startups were established in the same state where U.S.-born tech founders received their education. Of the U.S.-born tech founders receiving degrees from California, 69 percent later created a startup in the state; Michigan, 58 percent; Texas, 53 percent; and Ohio, 52 percent. In contrast, Maryland retained only 15 percent; Indiana, 18 percent; and New York, 21 percent.

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