A study has revealed that millennials are less entrepreneurial than other generations even though some the most successful people are part of that generation – think Mark Zuckerberg of Facebook, Brian Chesky of Airbnb, and a little closer to home Melanie Perkins from Canva and Jane Lu of Showpo.
Data by the US Small Business Administration found that in 2014 fewer than four percent of millennials were self-employed, compared with 7.6 per cent of Generation X-ers and 8.3 per cent of Baby Boomers and the failure rates of those startups owned by millennials are a lot higher.
The Pew Research Centre defines the millennial generation as those born between 1981 and 1996.
Roy Green, special advisor and chair for the UTS Innovation Council at the University of Technology, Sydney, speculated that the survival rate of the startups referred to in the study is due to the significant slowdown of business formation in the US.
“The US has stagnated and the US economy has lost a lot of its former economic dynamism,” he said.
But it’s also important to note that the data is not a direct reflection of Australia, said Professor Green.
“It’s certainly counter-intuitive. I expect everyone would expect to see greater business formation by younger people than older ones, and I guess there are some questions to ask about the data in relation to Australia. We can’t just assume it translates here.”
However, data produced by Startup Muster, suggests that the results by the US Small Business Administration are not so as farfetched, even when looked at in an Australian context.
Murray Hurps, director of entrepreneurship at UTS and a millennial entrepreneur, says data produced by Startup Muster showed the average starting age of entrepreneurs has increased from 36 to 40 years old between 2015 and 2017.
“I’m not sure if that’s an increase of people rethinking their careers and pursuing entrepreneurial careers, or a lack of younger people seeing the value of pursuing their own business, he said.
“But no matter what the case, there’s opportunities being missed by younger people not pursuing their own startups.”
“I think your ability to launch a startup when you’re younger is in many ways better than it’s ever going to be. You can take more risks, you’re less set in your ways, you don’t have a career to put on hold, and you can look to the world in a way that other people just can’t.
“I think maybe, particularly in Australia, there’s a tendency to get qualified, get a job, get sick of the job, and launch your own startup. But I’d love to see more people getting qualified and pursuing startups [from the start of their career].”
On the contrary, Prof Green pointed out a survey carried out by UTS showed that 40 per cent of the university’s incoming students – the youngest cohorts of the millennial generation – were interested in or likely to setup their own company.
“So, at UTS we have turned our attention to accommodate for that aspiration,” he says. The university now offers a Master in Entrepreneurship and has its own startup accelerator.
Similarly, research carried out by Omnibus showed that there’s a reasonably high appetite for self-employment amongst those under-35 years.
At the same time, there’s also evidence that there’s an increasing number of older people, who are mid-career and successful, and interested in participating in entrepreneurial activity.
Research by NBN showed that baby boomers were leading the charge of entrepreneurship
“While a lot millennials will say they wish to start a business, only a small proportion actually does, and an even smaller proportion is successful. It is a huge risk,” Prof Green says.
James Alexander, founder of Incubate and a millennial entrepreneur, believes part of reason why there’s a lack of millennials who actually start their own business is because of the personal risk and the under investment in supportive infrastructure.
“It’s hard to explain how it’s possible for a kid to graduate from university and start their own company, unless someone is going to invest in them,” Mr Alexander said.
“One way to look at is: ‘What’s the source of the funding for millennial entrepreneurs?’ If you take out family money, then all of a sudden you cut out a huge percentage of entrepreneurs,” he said.
“So, what we’re seeing now is all of a sudden you’ve got these micro-seed funds at various institution pop up that are writing cheques for young people to have a go.
“All the accelerators in the universities are great examples of that. These are all very early signs of that infrastructure you need to help young people to start and grow a business.”