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Education and Tech an assessment of U.S.

-born tech
Entrepreneurship entrepreneur demographics

A g e a n d Te c h Revealing new data about U.S.-


E n t r e p r e n e u r s h i p
born founders of technology and

Education
engineering companies
Following is a synopsis of a study that challenges the perception of American technology
epreneurship entrepreneurs as being 20-something students from elite universities. From a survey of
and Tech Entr 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
master’s, PhD, MD, and JD
Vivek Wadhwa
hold degrees from a wide assortment of universities. The study, published in May 2008,
Richard Freeman
was funded by the Ewing Marion Kauffman Foundation and conducted by researchers at
degrees fall within the thirty-
Ben Rissing

Harvard University and Duke University.


to fifty-year-old age bracket.
Study highlights:
• The average and median age of U.S.-born tech founders was thirty-nine when they
When subdivided by a tech founder’s
started their companies. Twice as many were older than fifty as were younger than
age at the time of startup formation, our
twenty-five.
sample approaches a normal distribution.
The majority of U.S.-born tech founders • The vast majority (92 percent) of founders held bachelor’s degrees; 31 percent held
holding bachelor’s, master’s, PhD, MD, master’s degrees; and 10 percent had completed PhDs. Nearly half of all these
and JD degrees fall within the thirty- to degrees were in science-, technology-, engineering-, and mathematics-related
fifty-year-old age bracket. It is interesting disciplines. One-third were in business, accounting, and finance.
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:
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 • U.S.-born tech founders holding MBA degrees established companies more
bpruitt@kauffman.org quickly (thirteen years) than others. Those with PhDs waited twenty-one years to
Universities and Tech Entrepreneurship
Kauffman Foundation start companies; other master’s degree holders took 14.7 years; and those with

W
bachelor’s degrees took 16.7 years.
e found that U.S.-born tech founders of Top Ten Universities Graduating
• U.S.-born tech founders holding computer science and information technology
engineering and technology companies U.S.-Born Key Tech Founders
tend to graduate from a wide degrees foundedThe companies sooner after graduating than engineering degree
628 U.S.-born tech founders providing
assortment of universities. While holders
elite, (14.3 information
years vs. 17.6 years). Applied science majors took the longest, at
on their terminal (highest) degree,
highly ranked schools hold no monopoly on tech twenty years. received their education from 287 unique universities.
entrepreneurship, some elite schools are over- Almost every major U.S. university was represented on
represented in the ranks of these tech founders, and
www.kauffman.org
companies formed by these schools’ graduates
this list. The top ten institutions in this group
accounted for only 19 percent of the entire sample, as
(over)

outperform those established by others. shown in Table 1.


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6 E D U C AT I O N A N D T E C H E N T R E P R E N E U R S H I P
degrees to slightly more than Other Colleges and Universities 76%
3 percent of our U.S.-born tech
High School 5%
founder sample. Harvard was
followed by the University of Total 100%
Pennsylvania with slightly more
than a 2 percent contribution. Education
andand Tech
technology Entrepreneurship
industries. While the Ivy-League
By contrast, in 2005, these Ivy-League schools schools graduated a larger proportion of U.S. students
graduated approximately thirty-three thousand twenty to thirty years ago, they did not come close to
bachelor’s, master’s, and PhD degrees, or the proportions of terminal degrees represented
1.6 percent of all U.S. degrees awarded at these levels among U.S.-born tech founders in our sample. We
(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 Efromd uour
c sample
a t i owhon a n d S t a
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
• The 628 U.S.-born tech founders providing information on of MBAs—55
their terminalpercent
degree and 43 percent,
received respectively.
their education from
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

U.S.-Born Tech Founder Education a


Percentage of 1995–2005 U.S.-Born Percentage of

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Ivy School Tech Founders Receiving a BS, MS, All 2005 BS, MS, and
e found a correlation
or PhD Degree from This School PhD Degree Recipients
between a U.S.-born tech
Ivy-League Schools: 8% founder’s terminal degree 2%
Brown University, and company performance.
Columbia University, Figure 7 displays the average 2005 sales
Cornell University, and total employment of the startups in
Dartmouth College,
our sample. In 2005, the average sales
Harvard University,
revenue of all startups in our sample was
Princeton University,
around $5.7 million, and these companies
University of Pennsylvania,
employed an average of forty-two
Yale University,
workers. Startups established by tech
Non-Ivy Schools 92% with terminal Ivy-League degrees
founders 98%
Total had100%
higher average sales and 100%
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
Education Statistics. Individual schools’ 2005 graduation statisticsworkers, respectively.
were obtained The success
from 2005 commencement of these
announcements.
two groups markedly contrasted with
startups established by tech founders with
• The top ten universities from which U.S.-born tech high school terminal
founders degrees,
received their which
highest had are Harvard, Stanford,
degrees
E D U C AT I O N A N D Tthan
less E C Hhalf
E N Tthe
R E Paverage
R E N E U Rrevenues
SHIP and 7
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.
• 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
University/Location of Startup
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.

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8 E D U C AT I O N A N D T E C H E N T R E P R E N E U R

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