Depending on the industry you want to work in, a university degree could help, but there are many examples of successful entrepreneurs who abandoned their studies to create, rather than acquire, their first job and who went on to achieve great financial success. This shift is partly responsible for creating a new breed of finance professional: the millennial investor.
They take a similar entrepreneurial approach to work as the leaders in their portfolios. But more importantly, the under 35, the so-called millennial generation, starts more businesses, with a higher headcount and greater profit ambitions than any other demographic. In fact, the BNP Paribas 2016 Global Entrepreneur Report found entrepreneurs are now aged 27 on average when they start their first business. This compares to an average age of 35 for the Boomer generation.
This serves to show that while starting a business has always been a (relatively) young person’s game, it has become less relevant to accumulate years of experience first. This is not to say we can discount experience completely. By the time these young entrepreneurs reach 30-35, they already have ten years’ experience under their belts and, if all goes to plan, a nice chunk of money to play with.
Consider Lu Zhang, the 28-year-old entrepreneur who sold her Medtech startup for $10m and then turned her hand to venture capital, ranked highly in Forbes’ 30 under 30. For her, entrepreneurship and becoming an investor came hand in hand – and it is perhaps further proof that millennials are more attracted to the idea of starting their own businesses. Not only could they be better off in the next ten years than if they’d jumped onto a grad scheme, but the experience gained could propel them onto the next, lucrative career level.
The millennial investor was born into a world where attitudes to work and careers are markedly different than for previous generations. They tend to take a more playful approach to investing without incurring the same level of risk. The following points break down the key facets of the mindset of a millennial investor.
According to Deloitte, millennials aspire to be self-employed, taking charge of their own destiny as an entrepreneur. In developed countries, 54 per cent of millennials started or plan to start their own business, while 27 per centare self-employed. Investors are no exception; they merely have the luxury of not putting all their eggs in the same basket.
Successful entrepreneurs are the rock stars of today. The millennial generation has grown up in an era where startups are the norm and their leaders celebrated, while CEOs of Fortune 500/FTSE 100 companies are eyed with suspicion.
For investors, the same is true. Facebook founder Mark Zuckerberg, PayPal founder Peter Thiel and investor Warren Buffet are household names. In addition to achieving great business success, they have been able to utilise their wealth to positively affect change in areas they have an interest in, such as philanthropy and politics. With these role models, the millennial investor can follow a varied career path while enjoying the autonomy to pursue personal projects.
One word of caution is that of course, we tend to celebrate the successes rather than lament the failures.
Most communities embrace rather than fear failure. Millennials consider it an intrinsic part of their entrepreneurial journey and are better than their predecessors at dusting themselves off to try again. They will certainly not be defined by their failures.
On advising others about their direct investments portfolio I always say “one must assume that money is gone”. Some 44 per cent of startups crash and burn within the first three years, so to prevent going up in smoke with them, investors should never put over 1ten per cent of their net worth into their portfolio investments. This is of course what separates the entrepreneur from the investor. The entrepreneur risks it all, while the investor combines their tenacity with his or her network and expertise.
Our age of hyper-connectivity has also given rise to the millennial investor. Previous generations of young trustafarians would have had to jump through hoops to earn their inheritance and then some before they were trusted to spend it wisely.
These days, successful entrepreneurs and young investors can make their own connections and in many ways are more primed to do so because more experienced businesspeople are only too happy to buy into the mentoring role. The investors that succeed are the ones who can earn a seat at the table based on the strength of their connections and exclusive expertise in a particular industry.
The millennial investor is in demand. Young founders will always be weary of overbearing VCs seeking to take control of their “baby”. Any partnership with a VC should be carefully considered based on values, aspirations and practicalities.
However, an investor of a similar age is more likely to share similar values, cultural reference points, which could be beneficial for a more open, and effective working relationship. This is a unique competitive advantage and I would advocate young aspiring investors to take full advantage of it before that window of opportunity closes.
Adrian Clarke is CEO and founder of Delarki
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