Stats Reveal Profile of the New American Entrepreneur
American entrepreneurs have historically come from all walks of life. From odd jobs to old money, company founders have similarly left their marks on American business despite their diverse backgrounds.
As the age of the internet has changed the world of startups, the profiles of American entrepreneurs have also changed. And while there will always be averages and majorities, a recent Kauffman Foundation study has shown that the new American entrepreneur has its roots in many different grounds.
Economic Background: Upper Class Takes Backseat to Lower and Middle Classes
While entrepreneurship may seem like a rich man’s game, the study shows that company founders come from a wide range of economic backgrounds. For example, a very small minority came from “old money” and upper-class backgrounds:
- Only 0.6% of respondents were born into and raised with wealth, while just 5.4% came from “new money” families that became rich within their own lifetimes.
By far the largest economic category of entrepreneurs came from middle-class backgrounds, with the majority coming from families with lower-paid white-collar workers as heads of households:
- 71.5% came from middle-class backgrounds.
- The study broke “middle class” into two categories: 36.9% were born into white-collar households, and 34.6% were classified as “upper-middle class” and raised by professionals often holding postgraduate degrees like MBAs, PhDs, MDs, JDs, etc.
While the stat above may not seem too surprising, what is surprising is the surge of entrepreneurs from lower-class backgrounds:
- 21.8% of respondents came from “working class” households supported by blue-collar workers and manual laborers, nearly four times more than those from wealthy families.
Educational Background: College Still Path to Success
Although the need for a wealthy background is becoming less and less of a factor in American entrepreneurship, what won’t change is the need to be educated. While college debt is rising throughout the country, the study shows that college accessibility has hit entrepreneurs of all walks of life:
- 95.1% of respondents have earned at least a bachelor’s degree, while 47% had more advanced degrees.
Life Stages: Experience Trumps Youth
While the vast majority of company founders are college-educated, only about half had hopes of entrepreneurship at a younger age or during their schooling:
- 52% percent said they were either “somewhat” or “extremely interested” in entrepreneurship during their youth.
- Only 13.3% said they were “not interested” in becoming entrepreneurs when they were younger; the rest (34.7%) “didn’t think about it.”
As such, the profiled entrepreneurs were in relatively later stages in life when they started up and had acquired years of industry experience before opening up their own shops:
- The average and median age of the study’s respondents was 40.
- 69.9% said they were married when they launched their first business.
- 75.5% had at least 6 years of experience at prior employers before starting their own businesses, while 47.9% had at least 10 years of experience.
Motivation: Money and Independence as Entrepreneurial Drivers
Not surprisingly, the desires to build wealth and to stop working for others were among the highest factors that motivated entrepreneurs:
- 74.8% cited building wealth as a motivator to found a new company; 60.3% cited the desire to work for themselves.
While many (68.1%) cited a main motivator in entrepreneurship as wanting to capitalize on a new business idea, the majority apparently had many ideas to work with and classified themselves as serial entrepreneurs:
- The average number of businesses launched by all respondents was approximately 2.3.