San Francisco, Feb 21, 2012, Reuters :
Josh Buckley, Chief Executive of an online gaming start-up, is looking forward to next month’s Game Developers Conference, particularly for parties with industry A-listers.
But, Buckley, who will turn 20 this week, may be turned away from the parties because he is not old enough to drink.
Such are the dilemmas facing the ever-younger entrepreneurs that Silicon Valley investors are backing these days.
While little data on the phenomenon exists, venture capitalists say they are funding more chief executives under age 21 than ever before.
“At a certain point, they can’t get much younger or we’re going to be invested in preschool,” quipped Marc Andreessen, whose venture-capital firm Andreessen Horowitz is one of several that backs Buckley’s company, MinoMonsters.
Andreessen and other venture capitalists say the entrepreneurs they fund at 18 or 19 typically have been prepping for years, learning computer code, taking on ambitious freelance projects and educating themselves on the Internet.
Some are self-consciously molding themselves in the image of Facebook’s 27-year old founder Mark Zuckerberg who created computer games as a child and was taking a graduate-level computer course by his early teens.
Internet businesses that target consumers make a sweet spot for the baby-faced, because online companies often require relatively little capital.
A semiconductor start-up might require $10 million to $20 million in the early stages, noted Joe Kraus of Google Ventures. Kraus helped back Airy Labs, an educational social-gaming company run by 20-year-old Andrew Hsu that raised $1.5 million. Hsu is now learning the same hard lessons as many of his elders: the company recently laid off staff and is looking to rent out some of its office space in Palo Alto, California. Hsu said the company is taking a different direction and focusing on a line of new products in math, language arts and science.
Andreessen says more than one young entrepreneur has asked him: “What did Netscape do again?” Andreessen co-founded Netscape, which developed the first commercial Web browser and helped launch the Internet era, shortly after graduating from college in 1993.
“I was 9 years old, during the first Internet boom,” says Brian Wong, 20, who runs reward-network Kiip. He has had his fill of stories about companies that tanked amid the dot-com bust of 2000. The first time he heard the name Webvan, a legendary dot-com failure, “I had to look it up,” he recalled.
Wong has raised more than $4 million from Hummer Winblad Venture Partners and others. He believes his age helps him and other youthful entrepreneurs. “You’re expected to be limitless,” he said. “Kind of destructive.”
While the freewheeling ways of the youth may be a positive for venture capitalists, they are less appreciated by landlords. Tim Chae, the 20-year-old chief executive and co-founder of social-media marketing company PostRocket, said his age and lack of credit created problems when he moved to San Francisco last year and needed an apartment. Finally, his father had to drive the 88 miles from Sacramento to co-sign a lease.
Chae, a Babson College dropout, now lives in nearby Mountain View and attends 500 Startups, a crash course for young companies run by a venture firm of the same name. He has raised a small amount of capital and hopes the upcoming Facebook IPO will help investors look more kindly on young entrepreneurs. “Thank God for Zuckerberg,” he says.
Zuckerberg, who left Harvard after two years, is helping recast the notion of dropping out of college. Peter Thiel, an early investor in Facebook and a co-founder of PayPal, is encouraging others to try that path through two-year fellowships for students who take a break from school, move to San Francisco and pursue their entrepreneurial aspirations.
That’s what 17-year-old Laura Deming did when she won a fellowship based on her goal of finding and funding anti-aging technologies and left the Massachusetts Institute of Technology. Because she is not yet 18, she finds herself faxing documents such as non-disclosure agreements to her dad back in Boston to co-sign.
Tackling minor troubles
Other young entrepreneurs have trouble negotiating the highways and byways of Silicon Valley quite literally. Sahil Lavingia, 19, recalls a day last summer when he had several meetings scheduled on Sand Hill Road, home to many of the nation’s leading venture-capital firms, and no car to get there. The journey of just a few miles took hours by the time he reached Stanford Linear Accelerator Centre.
Another time, despite his casual outfit of a pair of shorts for a meeting with blue-chip VC Accel Partners didn’t stop Accel from investing. Lavingia, an alumnus of hot online bulletin-board company Pinterest, raised $1.1 million for his payments start-up, Gumroad.
Most of the young entrepreneurs say their interest lies in building rather than selling their companies. Buckley had to say as much in response to inquiries he received from Facebook about a possible sale. His determination not to sell stems from advice he received from a successful executive he met last year at Y Combinator.