Education and Tech Entrepreneurship A g e
a n d
Te c h
an assessment of U.S.-born tech entrepreneur demographics
Revealing new data about U.S.born founders of technology and engineering companies
E n t r e p r e n e u r s h i p
Education
Following is a synopsis of a study that challenges the perception of American technology entrepreneurs as being 20-something students from elite universities. From a survey of 652 U.S.-born chief executive officers from 502 engineering and technology companies The majority of U.S.-born tech established from 1995 through 2005, this study reveals that today’s American tech founders holding bachelor’s, entrepreneurs are middle aged, well educated in business or technical disciplines, and May 2008 hold degrees from a wide assortment of universities. The study, published in May 2008, master’s, PhD, MD, and JD was funded by the Ewing Marion Kauffman Foundation and conducted by researchers at degrees fall within the thirtyHarvard University and Duke University.
epreneurship and Tech Entr
Vivek Wadhwa Richard Freeman Ben Rissing
to fifty-year-old age bracket.
Study highlights: When subdivided by a tech founder’s age at the time of startup formation, our sample approaches a normal distribution. The majority of U.S.-born tech founders holding bachelor’s, master’s, PhD, MD, and JD degrees fall within the thirty- to fifty-year-old age bracket. It is interesting that the left tail of the distribution is dominated by high school degrees, while PhD, MD, and JD degrees constitute the majority of degrees held on the right tail. This information is presented in Figure 6. Download this study:
• The average and median age of U.S.-born tech founders was thirty-nine when they started their companies. Twice as many were older than fifty as were younger than twenty-five. • The vast majority (92 percent) of founders held bachelor’s degrees; 31 percent held master’s degrees; and 10 percent had completed PhDs. Nearly half of all these degrees were in science-, technology-, engineering-, and mathematics-related disciplines. One-third were in business, accounting, and finance.
www.kauffman.org/edtech Search for these related studies at www.kauffman.org: • The Kauffman Firm Survey • The Kauffman Index of Entrepreneurial Activity
Contact: Barbara Pruitt 816-932-1288 bpruitt@kauffman.org Kauffman Foundation
• U.S.-born tech founders holding MBA degrees established companies more quickly (thirteen years) than others. Those with PhDs waited twenty-one years to start companies; other master’s degree holders took 14.7 years; and those with bachelor’s degrees took 16.7 years.
Universities and Tech Entrepreneurship
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Top Ten Universities Graduating e found that U.S.-born tech founders of • U.S.-born tech founders holding computer science and information technology engineering and technology companies U.S.-Born Key Tech Founders companies sooner after graduating than engineering degree tend to graduate from a wide degrees foundedThe 628 U.S.-born tech founders providing years vs. 17.6 years). Applied science majors took the longest, at assortment of universities. While holders elite, (14.3 information on their terminal (highest) degree, twenty years. received their education from 287 unique universities. highly ranked schools hold no monopoly on tech entrepreneurship, some elite schools are overAlmost every major U.S. university was represented on represented in the ranks of these tech founders, and this list. The top ten institutions in this group (over) www.kauffman.org companies formed by these schools’ graduates accounted for only 19 percent of the entire sample, as outperform those established by others. shown in Table 1.
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degrees to slightly more than 3 percent of our U.S.-born tech founder sample. Harvard was followed by the University of Pennsylvania with slightly more than a 2 percent contribution.
Other Colleges and Universities
76%
High School
5%
Total
100%
Education Tech Entrepreneurship andand technology industries. While the Ivy-League
schools graduated a larger proportion of U.S. students By contrast, in 2005, these Ivy-League schools twenty to thirty years ago, they did not come close to graduated approximately thirty-three thousand the proportions of terminal degrees represented bachelor’s, master’s, and PhD degrees, or among U.S.-born tech founders in our sample. We 1.6 percent of all U.S. degrees awarded at these levels (see Table 2). As such, our results showUa . S . - B o r n also T enote c hthatFthe o tech u n founders d e r Efrom d uour c sample a t i owho n a n d disproportionately high concentration of U.S-born tech graduated from Harvard University and the University founders with terminal Ivy-League degrees engaging in of Pennsylvania held a disproportionately high number entrepreneurial startup activities in the engineering MBAs—55 43 percent, respectively. • The 628 U.S.-born tech founders providing information on of their terminalpercent degree and received their education from
S t a
287 unique universities. Ivy-League universities awarded 8 percent of the terminal degrees to tech founders in the sample. Table 2: Over-Representation by U.S.-Born Tech Founders with Terminal Degrees Awarded from Ivy-League Universities1 Ivy School
U.S.-Born Tech Founder Education a
Percentage of Percentage of 1995–2005 U.S.-Born All 2005 BS, MS, and Tech Founders Receiving a BS, MS, e found a correlation PhD Degree Recipients or PhD Degree from This School
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between a U.S.-born tech founder’s terminal degree 2% and company performance. Figure 7 displays the average 2005 sales and total employment of the startups in our sample. In 2005, the average sales revenue of all startups in our sample was around $5.7 million, and these companies employed an average of forty-two workers. Startups established by tech Non-Ivy Schools 92% with terminal Ivy-League degrees 98% founders Total 100% 100% had higher average sales and employment—$6.7 million and fifty-five 1National 2005 bachelor’s, master’s, and PhD degree production data was obtained from the Institute for Education Sciences–National Center for respectively. The success of these Education Statistics. Individual schools’ 2005 graduation statisticsworkers, were obtained from 2005 commencement announcements. two groups markedly contrasted with startups established by tech founders with high school terminal degrees, which had are Harvard, Stanford, • The top ten universities from which U.S.-born tech founders received their highest degrees E D U C AT I O N A N D Tthan E C Hhalf E N Tthe R E Paverage R E N E U Rrevenues SHIP less and University of Pennsylvania, MIT, University of Texas, University of California-Berkeley, University of Missouri, number of employees—$2.2 million and Pennsylvania State University, University of Southern California, and University of Virginia. eighteen workers. Ivy-League Schools: Brown University, Columbia University, Cornell University, Dartmouth College, Harvard University, Princeton University, University of Pennsylvania, Yale University,
8%
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• U.S.-born tech founders with Ivy-League degrees tend to establish startups that produce higher revenue ($6.7 million) and employ more workers (55) than the average ($5.7 million and 42, respectively). Success of startups founded by those with only high school degrees contrasts sharply, with only $2.2 million in revenue and 18 workers. • Nearly half (45 percent) of the startups were established in the same state where U.S.-born tech founders received their education. Of the tech founders receiving degrees from California, 69 percent later created a startup in the state; Michigan, 58 percent; Texas, 53 percent; and Ohio, 52 percent. In contrast, Maryland retained only 15 percent; Indiana, 18 percent; and New York, 21 percent.
University/Location of Startup
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academi and the establish the tech startups awarded U.S.-bor individua academi of the fi breakou least twe degrees
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