Who Are You? Charting the Demographics of Venture-Backed Internet Startups
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study in the first place arises from the importance of “human capital” in the venture capital community.
“When we ask venture capitalists what gets them excited about the young, emerging, and often unproven companies in which they invest, we never hear about deals and dollars,” the report says. “Rather the first answer is frequently ‘the team’ or ‘the founders.’ This demonstrates just how crucial human capital is in VC investment decision-making.”
So who are the venture-backed Internet startup founders of 2010? Here’s some breakout highlights:
—Most of them are white (87 percent). Only 1 percent are black, in comparison to the 11 percent share of African-Americans in the total U.S. population, and 12 percent are Asian—about triple the 4 percent that Asians represent in the general population.
Among the Asian founders, CB Insights reports that 54 percent are South Asian (India, Pakistan, Bangladesh, Nepal, Butan, Maldives, and Sri Lanka) and 46 percent are East/Southeast Asian (Myanmar, Cambodia, Laos, Thailand, Vietnam, Malaysia, Indonesia, Brunei, Philippines, China, Japan, North Korea, South Korea, Taiwan, Mongolia, Macau, and Hong Kong.)
—CB Insights also provided data for the three states that rank highest in venture-backed startups. In California, 18 percent of the startup founders included in the study are Asian and 82 percent are white. In Massachusetts, 87 percent of the founders are white and 13 percent Asian. In New York, 89 percent of the founders are white, while 11 percent are Asian. CB Insights also provides data for startup teams.
—With regard to age, CB Insights concludes that wunderkinds are not the norm, and the average founding team is 35 to 44 years old. While almost half of the founding teams fall within the 33 to 44 range, CB Insights says companies with an average age in the range of 26 to 34 have the highest median funding—$2.5 million versus $2.4 million for founding teams in the 45-54 age range.
—Data generated for the report also substantiates the mantra that venture capital investors back founders with experience, with 39 percent of the founders surveyed showing previous experience as CEOs or founders. More founders does not necessarily result in larger funding rounds, the report says.