View all newsletters
Receive our newsletter - data, insights and analysis delivered to you
  1. Analysis
11 August, 2022

How Generation Z might change the investment world

A new study shows that the vast majority of Generation Z entrepreneurs would turn down investment if morals and ethics are not aligned.

By Sebastian Shehadi

The next wave of business founders will usher in new priorities, according to a new study commissioned by Connectd, a growth marketplace connecting start-ups with investors and advisors.

Free Report
img

Global FDI Annual Report 2022

Global levels of foreign direct investment (FDI) saw a strong rebound in 2021, as the market started to recover from the pandemic-driven downturn the prior year. But which locations, sectors and companies led the charge back to FDI growth? And can the momentum be maintained? Using our proprietary FDI Projects Database, GlobalData’s Investment Monitor team have sifted through the yearly data to provide a mapping of the investment landscape. The database, which tracks greenfield FDI projects in real time, is the most comprehensive in the market and has reported more than 3500 more projects for 2021 than other FDI data providers. The report also includes analysis of M&A data and a snapshot of corporate trends impacting investment. To see how the world’s major investment destinations performed in 2021, how top sectors and subsectors compare as drivers of FDI, and which companies are most active internationally, download this free report.
by GlobalData
Enter your details here to receive your free Report.

In a poll of 50 Generation Z entrepreneurs (aged between 18 and 24) and 50 entrepreneurs aged 25 and over, Connectd found that 96% of Gen Z entrepreneurs would turn down cash from a prospective investor based on moral and ethical objections, highlighting the importance of environmental, social and governance (ESG) credentials to new business leaders. 

Commenting on the findings, Roei Samuel, serial entrepreneur, investor and CEO of Connectd, says: “This study demonstrates the shift in focus for the new wave of entrepreneurs, who are increasingly prioritising ethical and societal purpose when choosing their partners. This can only be a good thing for future business leaders, ensuring that ESG is at the forefront of company growth from now on.”

Generation Z wants more than just money 

While funding remains the number one benefit investors bring, Connectd’s study found that 80% of Generation Z entrepreneurs value investors’ networks and connections, which drops to 63% for those aged 25 and over.

More than half of Generation Z entrepreneurs consider an investor’s green credentials when deciding who to partner with.

“Investors must be mindful that their ESG credentials are under the spotlight like never before,” says Samuel. “They can make it a real point of differentiation when partnering with new businesses.”

The research also found marked differences in how entrepreneurs across the generational divide are searching for investment. The vast majority (82%) of Generation Z entrepreneurs are using online platforms to find potential funding, compared with just 65% of older founders, who tend to use more traditional routes such as friends, family and legacy networks. 

Latika Vij, head of investor relations at Connectd, says: “The drive and dynamism of entrepreneurs doesn’t change across generations, but clearly there is an ethical and societal shift taking place. This puts extra onus on start-up investors to put ESG initiatives at the heart of their strategy to attract new start-ups to their portfolios.”

The study also found a generational gap in the use of social media, with 72% of Gen Z founders using sources such as LinkedIn to seek investors, and only 60% of founders aged over 25 doing the same.

This changes how Generation Z invests too

Connectd’s study has big implications for how future boardrooms, run by members of Generation Z, will look for, and receive, funding or mergers and acquisitions. It also presents an insight into how they, as companies, will invest themselves, domestically or abroad. 

If Generation Z businesses are more concerned about being backed by ESG money, they are likely to care more about ESG concerns when undertaking foreign direct investment, for example. The study also implies that such companies will be far more digital than their predecessors when looking for potential locations or sites to invest in. 

Should these findings be replicated in the real world, they bode extremely well for any climate change and social justice agenda.  

Free Report
img

Global FDI Annual Report 2022

Global levels of foreign direct investment (FDI) saw a strong rebound in 2021, as the market started to recover from the pandemic-driven downturn the prior year. But which locations, sectors and companies led the charge back to FDI growth? And can the momentum be maintained? Using our proprietary FDI Projects Database, GlobalData’s Investment Monitor team have sifted through the yearly data to provide a mapping of the investment landscape. The database, which tracks greenfield FDI projects in real time, is the most comprehensive in the market and has reported more than 3500 more projects for 2021 than other FDI data providers. The report also includes analysis of M&A data and a snapshot of corporate trends impacting investment. To see how the world’s major investment destinations performed in 2021, how top sectors and subsectors compare as drivers of FDI, and which companies are most active internationally, download this free report.
by GlobalData
Enter your details here to receive your free Report.

Topics in this article:
NEWSLETTER Sign up Tick the boxes of the newsletters you would like to receive. Data, analysis and deep insights on foreign direct investment delivered to you
I consent to GlobalData UK Limited collecting my details provided via this form in accordance with the Privacy Policy
SUBSCRIBED

THANK YOU

Thank you for subscribing to Investment Monitor