The venture capital firm First Round Capital analyzed 300 startups and 600 founders to show interesting findings. First, startups with a female founder in the team outperformed male only teams by 63%. Other studies show that gender diversity has a significant positive impact on stability and a company’s bottom line. In fact, a Kauffman Foundation report shows that companies run by women are more capital efficient and bring in a 35% higher return on investment.
First Round Capital finds that younger founders, under 25, perform nearly 30% above average. This is despite the average founders age in the sample being 34.5. The VC findings contradict with a sponsored survey by the Kauffman Foundation that shows founders over 55 are twice as likely to launch a growth startup than those between the age of 25 and 34. First Round Capital recognizes that their data is small and may not necessarily represent the overall market. Their findings can simply suggest their preference for younger founders.
The Kauffman Foundation and First Round Capital agree on the importance of education for founder success. The VC firm goes deeper to focus on the impact of founders’ college affiliation on their startup performance. They show that startups with at least one founder attending an IVY League school perform 220% better than other teams. School culture, surroundings, mentoring resources and education above all, contribute to the future success of an entrepreneur.
Research findings by Gompers and his colleagues show that entrepreneurs are more likely to succeed if they have failed once. Entrepreneurs gain experience and learn to avoid mistakes they make the first time they launch a startup. First Round Capital studied the effect of founders’ previous employment experience on their startup success. They find that teams with previous employment at billion-dollar tech companies such as Amazon, Google, Apple and Microsoft perform significantly better (160%) than other founders with employment in smaller companies. Furthermore, the pre-money valuation of tech employees of large companies is 50% higher than their peers.
In contrast to common belief, startups founded outside of America’s biggest tech hubs such as New York and the Bay Area perform just as well as those founded in those areas. First Round Capital attributes the findings to the fact that startups founded in tech hubs tend to get a bigger valuation and higher expectations.