This top VC has bet nearly 20% of its money on teens — here’s why

Kevin Hartz tends to be the first one in the door. In 2001, he co-founded Xoom, when sending money across borders meant standing in line at Western Union. In 2013, it went public, and in 2015, PayPal paid $1.1 billion for it. Four years after launching Xoom, he co-founded Eventbrite, which went public in 2018 and turned buying event tickets into something you can do without wanting to throw your laptop into the ocean.

After a stint at Founders Fund, Hartz co-founded his own investment firm, A* Capital (a reference to the computer science algorithm), and then, in 2020, caught another trend in front of the masses: the SPAC boom. His blank-check company, “one,” swallowed up 3D printing company Markforged in a $2.1 billion reverse merger in 2021, just as every other financier in Silicon Valley suddenly decided that SPACs were the future.

Now Hartz is turning to his next step: Teen Founders, not as a social experiment but as an unplanned investment thesis. His company recently cut a check to Aaru, an AI prediction engine whose co-founder was too young to get his driver’s license at the time. Hartz is by no means alone in this. Popularized by founders like Steve Jobs, Bill Gates, and Mark Zuckerberg, the drop-and-build movement has become a standard lifestyle choice for a certain type of ambitious kid.

Take Corey Levy, who interned at Founders Fund, Union Square Ventures, and Techstars while still in high school, then enrolled at the University of Illinois after his junior year. Today he runs Z Fellows, a one-week accelerator program that offers tech founders — even high school students — $10,000 grants. When Levy dropped out a decade ago, the Thiel Fellowship was a radical new idea. “The dropout community is now at an all-time high,” he told Business Insider last spring. “At a large group dinner of 15 or 20 people, we’ll look around the table, and no one will have a college degree.”

It’s become enough of a “thing” that the Y Combinator accelerator, which has quietly fostered a dropout culture since its inception, recently launched a program designed for students who want to start companies but don’t want to drop out. The program allows them to apply while still in school, gain acceptance and funding immediately, and postpone their participation in YC until after graduation. (For YC, which is known for being counter-cultural, this move is largely about branding.)

Naturally, TechCrunch has covered this trend: see here , here and here . But to learn more, I’ll be sitting down with Hartz at TechCrunch’s StrictlyVC event inside Disrupt’s streaming show, which starts in San Francisco on Monday, October 27. (Hartz speaks on Tuesday, October 28.)

In the meantime, here are excerpts from a conversation we had on Friday, as we began to explore the topic:

TC: We’ve always seen teens start companies, but this is for sure feel It’s like we’re seeing more of him than ever before, and you’re telling me that’s the case behind the scenes. Why do you think this is?

Kevin Hartz: You find these really smart kids who are really bored at school. I see classes of freshmen or sophomores at Stanford who fall into this category – they were completely bored, some of them ended up homeschooling, and they just excelled. Even in the best universities, they still go and leave with a thirst to build, learn and move forward. We had one company whose founders were 18, 18, 15 years old. I think the CTO is probably 16 now, but they were 15 at the time we supported them. But this isn’t really unusual.

How do Z Fellows compare to the Thiel Fellowship, which Peter Thiel launched years ago?

It’s incredibly similar. The difference is that the Thiel Fellowship is a non-profit, and — I’m a big fan of Peter’s — but as a non-profit, maybe there’s less of an endeavor. Korean [has] only [been] We’ve been building Z Fellows over the last few years, and it’s a really great program. It’s that thing again, that Peter was ahead of the curve, seeing the value in the irony of offering money in exchange for dropping out. This phenomenon has been growing and increasing, and who knows how long it will continue, especially with the cost of universities and what many people consider a toxic environment in poorly managed universities. All this leads teenagers to ask: “Why don’t I drop out of school and build?”

Do Z Fellows take stock in companies?

They offer a very small check – $10,000. Then there is a fund where they support people later. But it’s mostly a non-binding initial $10,000 piece. I think Corey is picking a few people to put $100k into pre-seed [rounds]also.

What do you think about the statistics we see about children not being able to get jobs outside of school? I have to think some of this is driven by the realization that even if you graduate, there may not be a job waiting for you.

There’s another phenomenon that happens – this flip-flopping that’s supposed to happen in year 26 or 27 where there will be more 1099s than W-2s. This means that 30 years ago, people worked for large companies like Nestlé, McKinsey or IBM. Now they work for themselves. They trade cryptocurrencies or build their own business. This indicates American individualism. It is as if the United States is heading towards hyper-entrepreneurship.

I think it’s because people want to create companies, but I also think that people are increasingly having to create companies after being pushed out of their roles because of the efficiencies accumulated through AI and others.

Paul Graham said something years ago that has always stuck with me, which is that it is both good and bad for a young founder to have a startup, because it takes over his life. I was a young entrepreneur. How do you feel about financing a 15-year-old, knowing that his company may do really well, and that person may never have the ability to experience what most 15-, 16-, 17-year-olds experience?

I found it to be an exhilarating experience, but it was interspersed with painful challenges. It brings out everything. This is a good point. [Seventeen,] This is the age of Marines who send them into battle because they are fearless. Maybe there’s something about this age where people are so difficult to drive. But I wonder if it is too early to understand the implications, given the newness of this phenomenon.

We’re just at the beginning of what I call the supercycle of expansion in technology, with AI and everything else — especially AI. We are in the very early innings. You have OpenAI and Anthropic growing incredibly quickly in the core part of the model. Now we’re all starting to work on the application layers. You have the co-pilots like Cognition, and then you have Decagon and Sierra in the AI ​​CRM space. But there are many other categories that still need to be disabled. Even Sierra and Decagon are still very early in their mission.

You have daughters. Would you like to see them go to college? How would you feel if they said, “Dad, I want to start something now and not go to college”?

Our 17 year old son is applying to colleges now. She wants the college experience. She wants that zest of life. She never questioned it. I tried to give her as many opportunities as possible to consider alternatives, and I will do the same with our 13-year-old daughter who is next.

Of the bets you’ve made over the past year, how many would have involved teenagers?

Nearly 20%.

Two years ago you would have said what?

About 5%.