According to a survey by Challenger, Gray & Christmas, an outplacement firm, 36% of jobless managers and executives below the age of 40, started their own corporation – up dramatically from previous surveys finding only a scant 6% of young executives willing to take that risk.
Challenger researchers pointed out that the trend is supported by an income growth of nearly 40% since 1990, more non-technical venture capital available, and post 9/11 urge to seize the day.
In the fourth quarter of 2001, 25% of discharged managers and executives starting businesses were under 40, up from just 6% in the third quarter. The percentage of under-40 start-ups increased another 11 percentage points in the first quarter to 36%.
The 36% figure is significantly higher than the quarterly average recorded between 1998 and 1991 when, according to Challenger survey data, just 16% of those starting businesses were under 40.
In the past, younger displaced managers and executives were more likely to return to the relative safety of the corporate setting, Challenger said.
It has certainly helped that an increasing number of households have a second source of income, should one be lost to downsizing, Challenger said.
More Non-Tech VC Available
Another trend that will help more young entrepreneurs get their businesses off the ground is the growing number of venture capital funds in low-tech places, the survey contended.
With the help of the Small Business Administration as well as banks and other local institutions, there are a growing number of venture capital funds sprouting up in non-tech regions, like Kentucky, Tennessee, and Ohio. There are now 62 funds in these and other low-tech areas, according to Thomson Financial.
The survey is based on the Challenger Job Market Index, a quarterly survey of 3,000 discharged managers and executives from a variety of industries throughout the US.