There seems to be a lot of mythology around the ascetic entrepreneur. My experience is that many founders begin startups from a place of financial strength. They either made money as employees of other startups before starting their own (after the startup was funded, greatly reducing risk), made money in industry before starting their own company, had a large inheritance, etc.

Does anyone have any concrete data on the finances of entrepreneurs when they start their first company, especially successful entrepreneurs? This study is the closest data I could find. http://www.kauffman.org/uploadedFiles/FactSheet/EduTechEntr1... It states that most entrepreneurs are older (median age 39) and have college degrees, often from good schools, and often advanced degrees. This suggests that they may have quite a bit of reserve cash to maintain much of their lifestyle, and/or a working spouse that helps do the same.