Millennials and Markets, Part III: Investing in the Source
July 6, 2020
In the second article in this series, we looked at how millennials prefer to search for investment opportunities that match their own lived experiences. Likely a consequence of the adverse economic conditions in which they were raised, younger generations have looked to cryptocurrencies as a solution to alleviate some of their economic fears, like inflation and bank failures.
In an economy where cradle-to-grave employment is all but gone and individuals have become accustomed to switching jobs every few years, brand loyalty has been deeply eroded among younger generations. Millennials and Gen Zers tend to support “the little guy,” over the blue-chip, name brands. Eschewing the rigidity inherent in many of these brands, they prefer to work, and invest, on their own time – supporting gig economy firms like Uber and Postmates.
In the final installment of this series, I wanted to face the cornerstone of the millennial capital paradigm – using investment to create social change – head-on. Many young investors have sought out ventures that directly address the societal inequities they hope to redress.
Directly Investing in Social Change
Millennials have long been known to directly invest in social change. Perhaps the most striking example of this was found during the movement for justice after George Floyd’s death. We witnessed the powerful impact of crowdfunding and social organization, allowing young people to leverage their money for social causes they cared about. ActBlue, the Democratic National Committee’s main fundraising wing, saw one of its largest fundraising hauls in the days after the initial protests. Young investors are becoming significant benefactors of nonprofits and advocacy groups, choosing to place their money not into corporations, but into institutions that will drive the change they wish to see in the world.
As a vocal proponent of tolerance, I am incredibly optimistic about the trends in giving that we are witnessing among the younger generations. We are seeing that they are not afraid to give directly to the social causes they care about; And, as technology continues to make the giving process even simpler, we will see millennial support for charitable causes grow exponentially.
Millennials are truly revolutionizing the investment landscape, leading with their values and eschewing all companies, commodities, and causes that don’t align with those values. As I have always said, the secret to investing is really no secret at all: Always keep your finger on the pulse of younger generations’ tendencies and the trends that emerge from them. By keeping this in mind as you make your next investment decision, the upside will be forever in your favor.
Many millennials and young people fell they were dealt a poor hand. To be honest, I can’t say I blame them. But they were also born into a period when consumer technology has taken off, when green energy has challenged the traditional oil barons, and when society has begun to value social awareness over capital gains.
Whether we choose to understand their preferences or not, they are the future of the US economy, and their propensities will dictate whether firms take off or sink for the next fifty years. These preferences, while different from my generation’s, are no mystery. With shrewd observation, venture capitalists can identify these preferences and invest in firms that advance them. The millennial investment wave is coming – it’s up to us whether we get left behind.