The magic of young ambition

Too often, young founders are overlooked, misunderstood, and underestimated. Investors will conflate youth with inexperience, inexperience with risk, and risk with rejection. This is unexamined first-order pattern matching.

It is true that by the nature of age, young founders typically face innate disadvantages. But investors have a responsibility to look past surface-level proxies like age and interrogate the traits that reduce inherent risks.

At NextGen, instead of following linear heuristics, we take the time to look for the following underlying founder traits that neutralise or override these disadvantages:

• Lack of industry experience or deep understanding of the problem space → overcome by being customer-obsessed, measured by their proximity to and frequency of engaging with customers, and having fast iteration loops based on their learnings

• Lack of general startup experience → compensated by having an incredibly high rate of learning, often coming through pairing humility with hunger, that enables them to absorb and act on feedback

• Lack of network to get customers, employees, and investors → made up through an ambitious vision, communicated by a founder who has magnetism and charisma to storytell with clarity

Just as young founders have unique challenges due to their age and circumstances, youth comes with unique, positive qualities that are often lost and cannot be regained as you grow older. You have to search for these innate advantages that amplify the upside, with a few being:

• An unconditioned view on the world and being unburdened by “how things are done”, which enables them to solve problems from first principles and reimagine how things could be done

• Minimal personal responsibilities, they can take what are perceived as ‘risky’ bets. Their life structure allows for intensity — moving faster, working longer, and building with stamina

• Naive optimism allows them to endure the brutal reality of building, shielding them from the overwhelming odds, and sustains belief when more ‘rational’ minds would quit

• A closer proximity to cultural and technological shifts gives them an intuitive understanding of where the world is heading, enabling them to build for the future

• Limited capital forces relentless resourcefulness, often bootstrapping MVPs, unlocking early traction, and continuing to be capital-efficient startups. Constraints also breed creativity.

If you know what to look for, you can neutralise the risks people associate with youth and uncover traits that make these founders more likely to generate outlier outcomes. It’s been proven for decades through the likes of Dell, Facebook, Google, Microsoft, and Atlassian, yet it is still underappreciated by most investors.

We’re glad to capitalise on this mispriced opportunity, identifying and backing youth early. We love the magic of young ambition.

As best said by Scott Farquhar, Australia’s most successful young founder, “the great thing about youthful naivety is they will just keep walking through walls until they find a door and they’ll open a door that you never knew existed”.

— Mitch

Scott Farquhar’s quote came from the documentary ‘FOUNDER | Melanie Perkins - Canva’, which is available for free on YouTube — it’s well worth a watch.