The Personal History of High-Tech Entrepreneurs

As the U.S. has experienced rising unemployment rates during the recent economic downturn, larger numbers of individuals with technology-based skills are finding themselves out of work. One policy option to seize the moment is to engage the unemployed, assisting them on a path to starting their own business. But what are the characteristics and family backgrounds of the general population who have become successful tech-based entrepreneurs?

In a recent report, "The Anatomy of an Entrepreneur," Vivek Wadhwa, Raj Aggarwal, Krisztina Holly and Alex Salkever examine the socioeconomic, educational, and familial backgrounds of 549 high-tech entrepreneurs, and the factors that motivated them to start a business. The authors find the entrepreneurs started their business at the average age of 40 years old, 70 percent were married at the time of launch, and 60 percent already had at least one child when they started their business. These findings may contradict existing stereotypes of tech entrepreneurs as primarily young people coming straight out of college without existing commitments to family.

The authors' analysis also found a full 95 percent of the entrepreneurs had bachelor degrees, with 47 percent having advanced degrees. Only 3 percent of their sample had a high school degree or less. From a socioeconomic perspective, 72 percent of respondents reported themselves as coming from a variety of middle-class backgrounds, as opposed to 6 percent from lower-class backgrounds. The authors contend, as a whole, entrepreneurs come from "stable, comfortable family existences" and poverty seems to be a significant barrier to entrepreneurship.

So, is being out of work what drives people to start companies? Not so much, according to the study, with 5 percent stating the inability to find work was an important factor in starting their own businesses. What really drives entrepreneurship, they found, is the desire to build wealth - indicated as an important motivation by three-fourths of respondents. Looking at industry experience, three-fourths of the entrepreneurs worked as employees at other companies for more than six years before starting out on their own.

As the survey examined entrepreneurs in high-growth industries such as the aerospace, semiconductor, biotechnology, software and engineering fields, the authors contend their research cannot be generalized for the entire population of U.S. entrepreneurs. And with many types of studies in this field, a certain "survivor bias" exists, such that the researchers interviewed are only the entrepreneurs who are still running companies, as opposed to those whose companies are no longer in existence.

"The Anatomy of an Entrepreneur" was released by the Kauffman Foundation and can be accessed at:

http://www.kauffman.org/uploadedFiles/ResearchAndPolicy/TheStudyOfEntrepreneurship/Anatomy%20of%20Entre%20071309_FINAL.pdf