Europe's Top Tech Entrepreneurs Founding Businesses by Age 30, Despite Lack of Significant Corporate or Financial Experience
March 1, 2017
Europe’s top tech entrepreneurs typically found their companies by the age of 30 – despite often lacking significant corporate or financial experience, reveals research by DHR International, the global executive search firm.
DHR’s analysis of 70 of Europe’s leading technology entrepreneurs shows that the average age of founders when their companies were established is 29.7 years old. The list includes the founders of household name tech companies such as Spotify, Minecraft and PayPal (who were 23, 31 and 23 respectively when they set up those companies).
DHR points out that this is slightly younger than the average age of tech entrepreneurs in the US’s Silicon Valley which is 31 according to research*– running counter to the perception that most US entrepreneurs typically found businesses earlier in their twenties.
However, relatively few of the European entrepreneurs analysed by DHR have significant previous big business or finance experience, with only 14% having ever held a senior role at a major corporate.
The same proportion – just 14% - hold a Masters in Business Administration (MBA), the postgraduate business and management degree which is widely viewed as a launchpad for aspiring entrepreneurs. In comparison, in the US 33% of ‘unicorn’ tech companies (US-based software firms founded between 2003 and 2013 with valuations of over $1bn) were founded by MBA alumni.**
In addition, only 4% have an investment banking background and just 6% have experience working in private equity or investment management – areas also traditionally seen as breeding grounds for ambitious entrepreneurs.
DHR says that previous experience may be important because, as tech companies grow rapidly, ensuring there is extensive expertise at senior level is vital to guide the business through the changes and challenges it will face, so that growth is profitable and it can meet escalating demand.
It adds that ambitious tech companies should evaluate and reinforce their leadership teams pro-actively as they expand, so that any shortcomings in skills or experience are identified and addressed in advance.
DHR is observing that investors are increasingly concerned over whether tech companies can generate sufficient returns to justify high valuations, as is evidenced by slipping share prices of tech start-ups and unicorns.
This is making it more and more crucial that they can demonstrate a balanced range of skills and an extensive track-record of experience on their management teams and boards. In particular, investors are keen to see that there is enough business and financial expertise at senior level to create a proper return on investment.
Gert Stuerzebecher, Partner [and Head of the Digital Technology practice] at DHR International comments: “As tech companies expand, they need to balance vision and creativity with experience in delivering shareholder value.”
“Board and senior management composition is something investors are scrutinising more and more, to make sure that they can really handle the growing pains these companies experience and deliver profitability.”
“With valuations in the technology sector slipping, the days of throwing money at a good idea have probably peaked.”
“Today investors are increasingly looking for a broad-base of backgrounds and capabilities at top level, with key people in place who are going to make sure the burn rate is not too high, and who will deliver ROI.”
“A key element we find in many successful new business endeavours is a complementary team composition: Ideally combing those with a game changing attitude and a revolutionary ambition to create growth with those who bring in clear-cut experiences in managing the growth path ahead.
Gert Stuerzebecher adds, “In a rapidly growing organisation, understanding where gaps in skills and experience lie is essential. Tech businesses need to ensure they choose candidates for top positions who can really add value, bringing additional dimensions and new perspectives to the table.”
The research also found that:
- 43% of these leading tech entrepreneurs are serial entrepreneurs who have started other businesses prior to launching the companies for which they are most recognised.
- Interestingly, less than half (44%) have a technology background, having worked in an IT role or for a tech company previously.
- 80% have a University degree or diploma (including an MBA).