Discover how many founders have a family member who is also an entrepreneur.

Do most startup founders have an entrepreneurial parent, and does having a close connection to an entrepreneur impact a startup’s success?

As part of our assessment research, we survey founders of technology startups and scalable ventures and include the question “Within your closest circle of friends and family, who has an entrepreneurial background?” We ask the respondent to check all types of connections that apply.

We discovered that in many ecosystems, the majority of these founders have a friend or family member who is also a business founder. 82% of tech founders in 28 ecosystems surveyed said that they had at least one entrepreneur among their close connections. In 68% of these ecosystems, above 80% of such founders have a close connection to a person with an entrepreneurial background.

Where Do Founders Have the Closest Connections?

Of the ecosystems analyzed, Los Angeles has the highest percentage of founders with a family or friend who is an entrepreneur, at 92%. 50% of the Los Angeleno founders surveyed report being second-generation entrepreneurs.

We also learned that 60% of respondents have friends who are founders and 53% have a family member who is also an entrepreneur. Is there an entrepreneurial gene? Unfortunately, we’re not geneticists and can’t answer that one, but we found that Boston, London, and Phoenix have above-average family connections. In these ecosystems, more than 60% of founders surveyed have an entrepreneurial family member. And while an average of just 11% report having a sibling who launched a business, in Sydney more than double do—25% of respondents in the Australian startup hub have an entrepreneurial brother or sister.

A related journal published by Yusuf M. Sidani and Jon Thornberry in Business Ethics Quarterly states, “We examine the practice of nepotism in the Arab World and analyze how a rational-legal model of bureaucracy was never able to take hold. We draw upon ideas from institutional theory and related notions of legitimacy to provide an explanation of nepotism’s extraordinary persistence. Then we use arguments to speculate how the appearance of institutional entrepreneurs who are advocates for a new hybrid form of nepotism might begin to colonize a social space created by larger political and economic changes that are sweeping the Arab World. Those entrepreneurs must persuade other members of an extended family that the current practice of nepotism is typically destructive of a firm’s competitive performance. In addition, they will argue that nepotism as currently practiced violates the teachings of Islam. This second argument is likely to be particularly effective with an audience that sees Islam as a source of universal notions of justice and fairness.”

How Does Being Closely Connected to an Entrepreneur Matter?

We can’t say whether knowing a founder influences someone to follow the same path, but being closely connected to other entrepreneurs is a key indicator of startup success. In fact, Startup Genome research demonstrates that startups with high Local Connectedness see 2.1x faster revenue growth versus those with low Local Connectedness.

A strong sense of community emerges in ecosystems with close relationships, and it’s the quality, not necessarily the quantity, of those relationships that can make all the difference to a startup’s success. Physical proximity is less important than having high-quality, trusted relationships in which people share knowledge and assist each other—the kinds of relationships we tend to have with family members and people we consider close friends. Events and activities can help spark such relationships, but coworking spaces and meetups do not automatically build a true sense of connection or community.

If you don’t have a family member who founded a business, and even if you hate the idea of networking, attending some events and then putting the work into developing genuine friendships with even one or two other entrepreneurs could help your venture thrive.

So, are all startup founders the children of entrepreneurs? Only 38% of respondents reported having a parent who had launched a business. If you’re not one of them, rather than lamenting your lack of parental example or inherited business skills, seek out other founders in your community and create genuine friendships—it could be the secret to your startup’s success.

Source:  startupgenome /jstor/ Business Ethics Quarterly