What Do Millennial Crowdfunding Investors Want?

Millennials, people born between 1980 and 2000, are becoming the biggest demographic enjoying significant spending power, the number of 18 to 24-years-old investing through equity crowdfunding platforms confirms.

For instance, Crowdcube has nearly quadrupled their presence since 2016, the Financial Times reports, an increase not seen in any other age group despite the high risk involved with this specific investment class which went mainstream just in a matter of a few years.

According to Nikou Asgari, behind its success there is the fresh way companies pitch prospect investors by including videos to a generation grown up watching YouTube.

Moreover, the possibility for founders to engage directly with their communities has been indicated as an additional trigger to succeed.

Indeed, Crowdcube’s co-founder Luke Lang confirms equity crowdfunding provides companies with the opportunity to create “their own tribe” whilst being “purpose driven and community focused”. In turn, this allows entrepreneurs to convert investors into customers (and vice-versa).

One of the Millennials crowdfunding investors reached by the journalist confirmed this view stating that “With traditional stocks and shares, it’s hard to assess and understand company ethos and what they stand for and what the actual value offering is.”

More in general, young investors are proved to favour companies with a defined purpose and awareness of the impact they have on society starting from the communities they work with.

In this perspective, data from a recent survey by the consulting firm Deloitte confirm a mismatch between what company do and what they should according to Millennials.

Source: 2018 Deloitte Millennial Survey

This is why, for example, big corporations have started to change the way they approach Gen Y. In turn, sustainability has become a new frontier in the investment industry.

Hence, companies like Unilever and Reckitt Benckiser, for example, have started to change accordingly their business models in view of the increased attention to their footprint, the Investor Chronicle reports.

All in all, in the context of a society that is still trying to recover from the 2008 financial crisis in the midst of trade wars, slower economic growth, volatility and Brexit, what Millennials seem to favour is more fairness starting from the transparency provided by platforms whereby “On the pitch page, investors can see the share price, valuation, capital requirement, how much has been invested so far and whether the shares include voting rights and tax relief,” although this implies a higher risk and a long term approach, like in the case of equity crowdfunding.

However, the sustainability of equity crowdfunding as an industry, research confirm, depends on the post-campaign outcomes and in particular on factors that can affect the annualized return including the quality of non-executive directors, patents and tax incentives along with the presence of professional investors.