There has been a recent rise in Gen Z angel investors, undoubtedly thanks to the internet, the proliferation of information, and the push towards transparency in the business industry. A decade ago, the world of investing felt more exclusive and, indeed, less accessible for the average person. Now, however, there are a plethora of crowdfunding services that have opened the doors to opportunities for both investors and entrepreneurs. Investing your money—and finding start-ups to invest your money in—has never been easier.
An angel investor is an individual who invests their time and money in small start-ups or entrepreneurs in exchange for future equity. As reported in Wired, angel investing was historically exclusive to accredited investors, who were people of certain wealth and experiential backgrounds as determined by the US Securities and Exchange Commission (SEC). In other words, younger people previously found becoming angel investors next to impossible. However, pivotal changes were made by the Commission. In 2016, the SEC legitimized equity crowdfunding, which meant that start-ups were able to raise money via donations from average citizens who weren’t accredited investors. More recently, in 2020, the SEC redefined what it meant to be an accredited investor, thereby allowing anyone with an understanding of private markets to become an angel investor.
Alongside the SEC changes, social media’s rise has afforded people the opportunity to connect with others from around the world. A portion of Gen Z—arguably the most social media-savvy generation—has capitalized on this connectivity, exchanging entrepreneurial ideas via platforms like TikTok, Twitter, and, most notably, Slack. In fact, Gen Z VCs, a Slack community of over 8,000 members (and growing), launched in November 2020 as a place for Gen Z entrepreneurs, venture capitalists, and angel investors to connect to and support each other. Clearly, the rise of Gen Z angel investors can be attributed to our world’s openness to information and communication.
In a Crunchbase News feature, Joe Niehaus, a 22-year-old University of Cincinnati student, explains how the Gen Z VCs Slack channel helped connect him to Fishwife founder Becca Millstein. Initially unable to meet the minimum investment amount for the ethically sourced tinned seafood brand, Niehaus reportedly earned extra cash by fulfilling orders on Door Dash to put in money into Fishwife. In Wired, Johnny Yu, a 21-year-old New York University student, explains how he cut a check for a small start-up as a “way to complement his parents’ portfolio, which is made up of more traditional assets like real estate.”
For Gen Z angel investors, it’s less about getting rich and more about dipping their feet in the start-up eco-system, precisely because of the investment world’s formerly hard-to-break roadblocks. Like Niehaus and Yu, they’re aiming to build diverse portfolios in hopes of diluting the risk of their investments and gaining experience to enter the world of venture capitalism and investment. On top of that, their goal is to connect with as many people as they can. “This is a place where we all learn and grow together,” says the Gen Z VCs website. For them, at least right now, networking and experience-building are the real payoffs.
Jericho Tadeo | Contributing Writer