Entrepreneurs are great, but it’s mom and dad who gave them their start

No surprise.

 

https://www.theguardian.com/business/2021/jan/31/small-business-entrepreneurs-success-parents

Gene Marks

@genemarks
Sun 31 Jan 2021 07.00 EST
Last modified on Sun 31 Jan 2021 07.02 EST

What do Bill Gates, Jeff Bezos and Elon Musk really have in common? Sure, they’re all tech billionaires, super smart people, savvy innovators and successful entrepreneurs. But there’s another thing: they all had families who helped them at the very beginning.

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Family money and background plays a critical role when it comes to starting up a business. In fact, it’s one of the primary sources of funding for startups, well ahead of other options like bank loans and venture capital. And the more money mom and dad have, the better. A new study confirms this.

“There is a strong connection between your parent’s income and your chances of becoming a startup entrepreneur, with those from a strong financial background having a higher chance of becoming entrepreneurs,” said Shira Greenberg, the chief economist Israel’s ministry of finance, in a recent report conducted by his agency and reported by the Jerusalem Post.

The study – which used demographic, academic and financial data from Israeli entrepreneurs between the ages of 25 and 35 and their families – found that the income of an entrepreneur’s parents was the most important factor towards the likelihood of starting up a business.

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The Israeli study correlates to the 2013 findings of University of California, Berkeley economists Ross Levine and Rona Rubenstein, who looked at the shared traits of entrepreneurs and found that most were white, male, and highly educated. “If one does not have money in the form of a family with money, the chances of becoming an entrepreneur drop quite a bit,” Levine told Quartz.

And even though having money is important, it’s not all that. It’s the family environment that has a big impact on the startup entrepreneur.

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Being intelligent wasn’t a factor either. The Israeli study found that even those that scored lower on mathematic achievement tests but came from a family with higher income and wealth had more of a chance becoming an entrepreneur.

Obviously, none of this necessarily translates into success. There’s a difference between starting a business and actually making it profitable and valuable. Bezos, Gates, Musk and all the other billionaires who got help from their parents took advantage of that help and then used their brains, work ethic – and a little luck – to build great companies. But none of this would have happened if they didn’t at least start somewhere.

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