In 2019, small and medium businesses looking to raise capital often choose crowdinvesting over venture capital and other traditional fundraising methods.
Whether you are raising capital via a legacy crowdinvesting platform or a digital securities offering, you will inevitably be targeting the most powerful group of investors in the world: millennials.
How yesterday’s teens have become the strongest investing force? Simple statistics: young people in their 20s and early 30s are the largest generation ever that is expected to control as much as $20 trillion of assets globally by 2030.
Digitally-native millennial investors are different from their predecessors: they are not satisfied with traditional investment opportunities and advisors, they seek higher yields and prefer to invest in tech innovation and ideas they personally believe in.
For anyone preparing a fundraising campaign, it is crucial to understand the mentality and investment habits of the millennial generation. This article is a portrait of modern “Gen Y” investors and the factors influencing their investment decisions.
Millennials - who are they?
Millennials are individuals born between 1980 and 1995, named so for being born on the verge of two millenniums – two completely different eras.
If there is one word to best define this group, it is technology. In their conscious teens and adulthood, millennials already had internet as an essential part of their everyday lives. They are true digital natives, to a large extent living their lives in a digital world.
Recalling a popular meme, in Maslow’s hierarchy of needs WiFi would be placed under the basic physiological needs for them. This joke is not far from being true. Millennials love everything tech-related and tend to rely on technology in every aspect of their lives – from dating and talking to friends to shopping and personal finance.
Generation Y investing
Unlike older generations, who would pick up a phone and call their broker to purchase shares, millennials are much more comfortable with using online investment tools. For them, technology equals speed and convenience: legacy investing systems are slow and cumbersome, which makes them less attractive for this group. It is crucial for a millennial investor to be able to go through prospectus and all documentation in several clicks, to have instant communication with the team. If they like the project, they want to invest instantly - in any currency they like, including crypto. The respondents of survey conducted by Provoke Insights in July 2019, believed that “increased access and transferability of assets would encourage them to invest more”.
Millennials have been growing up in the times of massive student debts and economical instability, which boosts their search for financial independence and alternative means of income. Generation Y investors are characterized by a strong concern about impending recession, which makes them extremely eager and open to new investment opportunities with higher liquidity. 92% of the respondents of the same survey were “very interested” in fractional ownership of previously illiquid assets, like private startups, real estate, fine art and others, enabled by tokenization.
How millennials make investment decisions
Millennials want to make their own decisions and are often distrustful of traditional financial professionals. Instead of taking professional financial advice, millennials would rather consult their peers and follow their own instincts.
Being born and raised on the cutting edge of technology, they have a native feeling of what is trending in new industries. “Gen Y” has no problem analyzing whether a tech product they’re investing in will be in demand: they invest in the products and services they are going to use themselves. Reflecting their personal interests and lifestyle, in 2018 US and Canadian millennials expressed most active interest in stocks of tech and cannabis companies.
Except for investing in what they believe in, millennials have also been taking into consideration the social and environmental impact of their investments. According to 2018 Spectrem Group Research Report on Millennial and Generation X Investors, “more than half of Millennial investors (52%) see the social responsibility of their investments as important selection criteria”.
Conclusion: targeting millennial investors
How to attract millennial investor to your crowdinvesting campaign? To sum up:
- Pay attention to what millennials care about and express interest in: they are only going to invest in what they would use personally
- Explore new ways to offer fractional ownership to investors, including tokenization
- Highlight the social responsibility of your company and transparently show to investors the impact of their capital
Keeping in mind the mentality of this massive investment force, you can access the largest pool of capital in the world.