One evening earlier this month, I was at a entrepreneur-packed, outdoor party in Austin. The beer was flowing, the music was blasting, but here’s the thing: It was co-hosted by the AARP.
It’s not an organization you’d expect to see courting young tech founders and Silicon Valley venture capitalists. But if you’re a startup, particularly a health startup, get ready to see more of the nonprofit, which is on a mission to both bring more innovation to the 50+ crowd and sow some entrepreneurial seeds among people in that demographic.
To twenty-something startup founders, building services and products for silver-haired seniors might not seem as sexy as taking on messaging apps like Snapchat. But the AARP has some strong statistics on its side: every day, 10,000 more Baby Boomers join the 50+ demographic, which includes more than 100 million people, and, as a group, they spend $3.5 trillion a year.
Among policy wonks in D.C., addressing the needs of older Americans is seen as a burden, said Jody Holtzman, AARP’s SVP of thought leadership. But for startups and investors? It’s an opportunity, he said. “You’d really have to be an idiot to turn your back on the only humongous growth market that exists,” he quipped.
The ‘Longevity Economy’
In 2011, the non-profit launched its “Innovation@50+” campaign at the DEMO startup conference, with scholarships for startups that either target the 50+ market or included a 50+ founder. In April, it will host its second annual Health Innovation@50+ LivePitch event, in which selected startups pitch in front of investors and a voting crowd of AARP members.
But this year it also partnered with the Ewing Marion Kauffman Foundation for a startup training program for Baby Boomers, funded Oxford Economics research into what the AARP calls the “longevity economy” and, this October, will back a Bloomberg conference exploring the costs and opportunities associated with longer life expectancies.
Some of the startups it has supported have gone on to attract attention from other accelerators and venture capitalists: Carelinx, for example, the winner of its Live Pitch event last year, went on to join the Startup Health Academy, and NeuroTrack, which graduated from health accelerator Rock Health, recently took the health prize at the SXSW startup accelerator.
Overcoming the youth bias
When the AARP first launched its campaign, Holtzman said, they were the ones making cold calls to health tech accelerators. Now, he says, they’re on the receiving end of that communication. In the not so far off future, as it looks for additional ways to encourage innovation to benefit those over 50, it’s possible that the AARP could sponsor an entire class at one of the new incubators for health startups.
Its efforts are being aided by growing interest in general digital health startups, many of which target senior needs. But getting venture capitalists to embrace older entrepreneurs could be a different kind of challenge. A couple of years ago, investor Vinod Khosla said at a conference that “people over 45 basically die in terms of new ideas.” And, judging from all the recent college grads (and college dropouts) that get venture funding, he’s obviously not the only investor to favor younger favors.
“The bad news is that most traditional VCs have a youth bias that they will state very overtly,” said Steve Jurvetson, managing director at venture firm Draper Fisher Jurvetson. “You always wonder if that’s a self-fulfilling prophecy or if it’s something about the nature of those businesses.”
Are younger founders really more successful?
Despite Silicon Valley’s preference for young entrepreneurs, the research may not be on their side. A 2008 study led by columnist and Singularity University vice president of innovation and research Vivek Wadhwa looked at 502 successful engineering and tech companies. It found that the average and median age of successful founders was 39 and that twice as many founders were older than 50 as were younger than 25. It also found that there were twice as many founders over 60 as under 20.
Jurvetson has long talked up the value of the 50+ demographic and his firm has invested in several companies with applications for, and/or led by, those who are 50+. Posit Science, for example, provides brain-training software that can be used as part of elder care (as well as for anyone hoping to sharpen their mind), and its co-founder and chief scientific officer, Michael Merzenich, was over 50 when it launched. Other companies include Rethink Robotics, founded by 58-year-old Rodney Brooks, and Synthetic Genomics, founded by 66-year-old Craig Ventner and 81-year-old Hamilton Smith.
According to the AARP, hundreds of new startups are founded by seniors — one of the first startups to benefit from its DEMO scholarship, called OhMyMeds, was co-founded by a 71-year-old (it later went out of business). And it makes sense that after decades in a given industry, older professionals would have the experience and perspective to start their own business. To date, the majority do so without ever looking for venture capital. But, in the future, it’s possible senior startup founders could find that they have another source of investment: the AARP.
“I hope that down the road, we’d be in a position to invest or invest in funds looking at opportunities in the space,” Holtzman said. “But we’re not there yet.”