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Who Is the Typical Entrepreneur? Not the Mark Zuckerbergs of the World

A new survey provides a detailed picture of what kinds of people are starting companies.
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Mention "entrepreneurs" and you may conjure up the image of a gaggle of college-aged Zuckerberg clones, each outfitted in an identical hoodie.

But the Startup Environment Index, a survey of nearly 1,500 people who founded businesses last year released this morning by the Kauffman Foundation and LegalZoom, paints a more nuanced picture of the oft-characterized group.

While the report confirmed some well-known common ground among entrepreneurs--including red tape frustrations and a reliance on personal savings for initial capital--the data revealed some significant differences between male and female founders and their businesses.

Highlights of the report include:

1. There's a blackout age for female entrepreneurs. According to the report, female entrepreneurs are most represented within age groups 18-29 and 50-55--with smaller percentages of women founding businesses between ages 30 and 49.

Though anecdotal research was not part of the survey, the numbers leave plenty of room for speculation in a week that included the release of Facebook COO Sheryl Sandberg’s book Lean In about women in the workplace and Yahoo CEO Marissa Mayer’s elimination of the company’s work-from-home policy.

Still, Kauffman Foundation acting director of Reaseach and Policy Dane Stangler told Inc. the higher concentration of entrepreneurs among very young women could be a good sign. “Younger women—I would hope that their higher relative share represents a step towards more diversity in the world of entrepreneurship,” said Stangler.

And while most companies are founded by individuals in their thirties or forties, the highest percentages of male entrepreneurs are within age groups 40-49 and 60-plus.

2. Male entrepreneurs are less educated than female.  The report stated: "A higher percentage of men in the sample have no more than a high school (or equivalent) degree, while greater shares of the female business owners have master’s and professional or doctorate degrees."

Stangler said he feels this may account for the spike in female entrepreneurs in their 50's—women may be taking time in their thirties and forties to pursue advanced degrees. 

3. Companies founded by male entrepreneurs still pull in higher revenues. Female-owned businesses account for approximately one third of those that fall within the $0 - $49,000 revenue tier, but only one sixth of the $1 million plus group. According to the Index: “The gender imbalance of the entire sample is not only reflected in the revenue numbers, but worsens with higher revenues."

Other highlights from the report include that the term “start-up” can be misleading—the majority of entrepreneurs think long and hard before formalizing their idea.

Only nine-percent of entrepreneurs surveyed worked on their business concept for less than a month before legally incorporating. In fact, more than three quarters of those surveyed said they considered their idea for anywhere from one month to three years before legally forming a company.

For Stangler, this is the most striking piece of information—and area of ignorance— revealed by the survey.

“Most academic research into entrepreneurship is based on firms only after they’ve legally incorporated, which means we’re excluding a lot of activity,” said Stangler. “It’s just a reminder of how much we don’t yet know.”

Last updated: Feb 28, 2013




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