Start-up in Your 50s? Think Again

Start-up in Your 50s? Think Again

Chia-Li Chien, PhD, CFP®, PMP® Oct 27, 2018

The average successful start-up founder is age 41.9, according to 2018 research by Dr. Azoulay at MIT and the U.S. Census Bureau. Dr. Azoulay and his research team studied 2.7 million founders between 2007 and 2014 that have at least one employee in their start-up. Success was measured two ways in the study. First, the start-up founder exited the business through IPO or acquisition. Second, the firm’s employment is in the top 0.1% five years from inception of the start-up in the dataset population. The study concluded that a founder at age 50 is more likely to have a successful exit compared to a founder aged 30.

Age often is credited with the founder’s extensive industry-specific experience and market knowledge in innovation. Other than age, success tends to reward those who structure their firm with a team. The study suggested that financial backing from venture capitalists (VC) should consider founder’s age when constructing their investment portfolio.

The research stirred up many media posts to favor start-up after age 50. Jeff Haden, writing in Inc., seems to suggest that a 50-year-old founder is more likely to be successful than a 30-year-old founder. I argue that Dr. Azoulay’s research was construed incorrectly.

Many factors contribute to the likelihood of success in a start-up, not just the success as defined in Dr. Azoulay’s study measured by external transfers such as selling to third-party in merger and acquisitions (M&A) or initial public offering (IPO). But there are three possible exit outcomes in any start-up: 1) internal transfers, 2) external transfers, and 3) death of the firm (start-up). Dr. Azoulay’s study identified that approximately 53.2% of “firm deaths” were under founders younger than age 30 compared to 45.6% from founders older than age 30. There was no consideration of internal transfer, nor other types of external transfer other than IPO and M&A. But there are twenty-seven different ways to exit. We can safely assume from Dr. Azoulay’s study that within ten years of start-up, approximately half of the firms failed regardless of the age of the founder.

Dr. Azoulay’s study aimed to encourage the venture capitalists to consider the older founders who have industry experience and market innovation knowledge. But the reality is that for older founders who took the start-up loans from their own retirement resources, they may never be repaid by their start-up if their firm falls in that failed start-up population.

Lindsay Cook found that having easy access to the lump sum withdrawal option from pensions or 401(k) potentially boosts the number of older founders. The concerns are not about the age, but the accelerated depletion of the retirement resource if the start-up failed. There is no loan for retirement unless you are qualified for the reverse mortgage. Even if you are qualified for the reverse mortgage, it may or may not be enough to support the retirement lifestyle.

For centuries, the Chinese culture has passed along the wisdom of the alignment of the six start-up variables that I mentioned in my book “Show Me The Money.”

  1. The right time. The innovative idea can’t be too early or too late in the industry cycle. Lyft or Uber wouldn’t have been successful twenty years ago when mobile technology was in its infancy.
  2. The right place. Selling bikinis to Muslim women may not be culturally acceptable.
  3. The right people. Building a business with no team can take a very long time.
  4. Owner-operator initially. The founder needs to have the pulse of the operation.
  5. Matched with the owner’s industry experience. Learning on the job is not something the founder should risk. Founder’s industry experience is vital as confirmed by Dr. Azoulay’s study.
  6. Owners’ skin in the game or founders’ own money. I seriously doubt any VC or financial institute will back a business without the owner’s own money in the game.

I agreed with Dr. Azoulay’s study that industry-specific experience and market innovation knowledge can position a start-up to be less likely to fail. But nearly half of the start-ups failed within ten years in their study.

The real question is, can you afford to risk your retirement resource for a start-up dream? If you are not sure, consult with a CFP practitioner to determine the availability of retirement resources that can be allocated for such investment. Here is the reality—is it worth the effort? No one knows what your future holds when you are beyond age 50. Taking the risk of a start-up may sound exciting and have potential. But at what cost? The “potential” of the start-up remains a mystery until it turns to misery or good fortune.


Atkins, Andrea. (2018). The 7 Steps To Starting Your Own Business After Age 50. Huffington Post. Retrieved From:

Cook, Lindsay. (February 16, 2017). Over-50s are the new business start-up generation. Financial Times. Retrieved From:

Haden, Jeff. (Jul 15, 2018). A Study of 2.7 Million Startups Found the Ideal Age to Start a Business (and It’s Much Older Than You Think). Inc. Retrieved From:

Azoulay, Pierre, Jones, Benjamin F., Kim, J. Daniel, and Miranda, Javier. (March 23, 2018). Age and High-Growth Entrepreneurship. Working Paper. Retrieved From:

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