San Francisco - Josh Buckley, chief executive of an online
gaming startup, is looking forward to next month's Game Developers Conference
in San Francisco, particularly for the parties and the accompanying schmoozing
with industry A-listers.
There's one problem: Buckley, who will turn 20 this week on
February 22, may be turned away from many of the parties because he is not old
enough to drink. His fake ID was recently confiscated, and the two new ones he
ordered from a company in China have not yet arrived.
Such are the dilemmas facing the ever-younger entrepreneurs
that Silicon Valley investors are backing these days. While little data on the
phenomenon exist, 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
Andreessen and other venture capitalists said 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 moulding themselves in the image
of Facebook founder Mark Zuckerberg, 27, 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 startup might require $10m to $20m in the early stages,
noted Joe Kraus of Google Ventures, and that would be tough even for the most
"If I'm going to write that big a cheque, I'm going to
invest in people who've done it before," he said. "But if you look at
it as, 'Hey, I'm going to raise $500 000,' there's a lot of ways to raise
Kraus helped back Airy Labs, an educational social gaming
company run by 20-year-old Andrew Hsu that raised $1.5m. 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 maths, language arts and science.
Kraus said his biggest hiccups with young entrepreneurs are
the business references they don't understand because they are too young to be
aware of them.
Andreessen said 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 nine years old" during the first internet
boom, said 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 $4m 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
Dad steps into the breach
While the freewheeling ways of 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 said.
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-ageing 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.
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
Lavingia rode a local train a couple of stops, caught a bus to Stanford
University and then hopped a shuttle bus to the Stanford Linear Accelerator
Center, which is on Sand Hill Road.
Another time, dreading the combination of a hot day and a
sweaty walk around Palo Alto, he pulled on a pair of shorts, even though he was
heading to a meeting with blue chip VC Accel Partners. The outfit - casual even
by laid-back Silicon Valley standards - didn't stop Accel from investing.
Lavingia, an alumnus of hot online bulletin board company Pinterest, raised
$1.1m for his payments startup Gumroad.
Buckley also ran into problems getting himself to Sand Hill
Road. One night he stayed up until 3 am and slept too late to get to a
scheduled meeting with a venture capital firm. "It didn't go down too
well," he said, adding that his profuse apologies and requests to
reschedule were met with a curt "no thank you".
Not to worry. Buckley, who had already sold a company while
in high school for a sum he said was in the low six figures, raised more than
$1m from Andreessen Horowitz and others.
At the time of the missed meeting, he was attending Y
Combinator, a three-month programme for start-ups. In a nod to the boy wizard
of book and movie fame, Y Combinator co-founder Paul Graham has called Buckley
"the Harry Potter of startups", but said he was not the youngest to
win admission to the programme.
That honour goes to John Collison, now co-founder of payment
company Stripe, who was admitted at age 16 but did not go through the
programme, Graham said. Instead, he and his then 19-year-old brother merged
their company with another, Auctomatic, and sold it to a Canadian company for
$5m in cash and stock.
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 said received recently 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: Mark Zuckerberg.