The grey economy: Third age entrepreneurs critical to growth

25/08/2009

"At a time when an ageing society is being viewed as a problem, our study shows that there is a wealth of experience driving the UK economy today."

A new report has revealed that Third Age Entrepreneurs are responsible for over a quarter of the companies set up in the UK in recent years.

The report, published by the National Endowment for Science, Technology and the Arts (NESTA), finds that entrepreneurs aged 50 -65 years, created 27 per cent of successful start up companies in the UK between 2001 and 2005. Over this period, more than 350,000 companies were set up, with Third Agers responsible for creating 93,500 companies and employing almost 400,000 people.

Start ups are often thought of as a young entrepreneurs remit - illustrated by success stories such as Google, Facebook and Innocent. However NESTA's report shows that experience is as valuable as the enthusiasm of youth - the companies which showed strongest growth were founded by a team of both young and older entrepreneurs.

The report shows that the UK has 122,300 'third age founders' responsible for successful start ups. 47,000 of these are 'solo entrepreneurs' - over 50's who have set up a company on their own.  Where a company was founded by a combination of young and over 50s entrepreneurs, the study showed that older founders were more actively involved in the business with 60 per cent responsible for wanting to form a team and 53 per cent having the original business idea.

Commenting on the report, NESTA's Chief Executive, Jonathan Kestenbaum says 'At a time when an ageing society is being viewed as a problem, our study shows that there is a wealth of experience driving the UK economy today. Many third age entrepreneurs are setting up exciting new companies which are employing thousands of people'.

The report found that Third Age Entrepreneurs are highly motivated by the desire to give something back to society and only half said they intended to retire after reaching 65 years old.  NESTA's report also found that third age entrepreneurs are just as happy to take risks as their younger peers. Many reported being less worried about their homes being repossessed as they have alternative forms of income from pensions, second jobs, other directorships and from property or investments.

Little difference was found in the sectors that younger entrepreneurs and those over 50 chose to start businesses in, challenging the belief that sectors such as high tech and creative industries are preferred by the young.

Entrepreneur, Professor Anton Ziolkowski, was in his late fifties when he, his colleague Dr. Bruce Hobbs and their PhD student David Wright, developed a new technology which radically cuts the cost of oil exploration. They launched their company, MTEM, from the University of Edinburgh in November 2004. It was the largest-ever spinout from a Scottish university with £7.5 million from investors.  The business generated revenues of £1.5 million from oil companies in the first quarter of 2007.  In June 2007 the founders and investors sold the company to Petroleum Geo-Services (PGS) based in Oslo for $275 million. Professor Ziolkowski continues to work for PGS as its chief scientist.

Professor Ziolkowski says, 'When we were starting the company it was at great personal financial risk, but we had enormous confidence in our idea.  We made a substantial profit from the sale of MTEM, as did the University of Edinburgh and our original investors, who were rewarded with nine times their invested money.  Older entrepreneurs have an important role to play and our experience should be seen as an asset.'

For further information please contact Chani Hirsch in NESTA's Press Office on 020 7438 2601 or Chani.Hirsch@nesta.org.uk

Notes to editor:

About NESTA

NESTA is the largest independent endowment in the UK. Its mission is to support innovation to drive economic recovery and solve some of the UK's major social challenges.

NESTA is a world leader in its field and is in a unique position to support and promote innovation through a blend of practical programmes, policy and research and investment in early-stage companies.

The Grey Economy: Third Age Entrepreneurs Critical to Growth

Why is this research important?

• By 2025, half the adult population will be aged 50 or over (27million people) putting a strain on resources. But this research points to the valuable contribution this sector makes towards setting up innovative new businesses and thus creating new jobs and economic growth.
• In the short term, it is expected that the current recession will disproportionately affect older workers in terms of redundancy and unemployment.
• Many social needs will be driven by an ageing population. These needs will require product and service innovation. Older entrepreneurs may be in a better position to understand such needs and may be more driven to meet them than younger founders.
• Large numbers of new firms generate large numbers of jobs. As unemployment is rising in the UK, we should be encouraging new growth from wherever it stems.
• Third Agers have a more valuable role to play in setting up new companies than previously thought. Their experience should be prized and their role as part of a team should not be underestimated.