Millennial investors: the driving force of crowdfunding

When crowdfunding first gained traction (which happened back in 2009, mostly thanks to Kickstarter), the world of investing started to attract everyone. But millennial investors are worth noting separately: according to experts, they are the driving force behind the growth of the global crowdfunding market. In 2019, according to some calculations, millennials made up between 30 and 40% of all investors. And it’s no surprise: small and medium enterprises are mostly created by millennial founders, and crowdfunding is an excellent way to raise capital.

Whether you’re raising capital with this method or you prefer traditional methods, millennials are the group of investors to watch when promoting your project. Why? Again, it’s a question of simple statistics: today, people between the ages of 25 to 40 make up the majority of the global population. By focusing on millennials, you’ll also focus on the largest pool of investors in the world. This generation of yesterday’s teenagers is slated to control up to $20 trillion assets by 2030.

In this article, we will determine who can be considered millennials, what are their characteristic features, their attitudes towards investing – and most importantly, how you can attract them.

Who are millennials?

Millennials are the generation of people born between 1980 and 1995. Their name originated due to their birth on the boundary between two eras: the twentieth and twenty-first centuries. Their key distinction from other generations lies in their adaptation and enthusiasm for technologies. Most millennials already had access to computers at a conscious age (and sometimes, when they were teenagers), while their parents – the previous generation X – were forced to adapt to technologies at a mature age, and thus have a less ‘flexible’ way of thinking.

The Internet is an essential part of life for millennials. Most of them have their own online lives that are separate from their real lives, and they often favor their virtual experiences more. For them, Wi-Fi is an essential need along with shelter and food in the Maslow pyramid. Millennials tend to rely on technology in all aspects of their lives: from finding a date to buying real estate.

How do millennials behave in the field of investing? 

When it comes to investment habits, millennials are also different from previous generations. Their needs aren’t satisfied by traditional business forms and opportunities, as they aim to maximize profitability and prefer to invest in technological solutions and innovations with the potential to increase the quality of life for the entire population (and for them, too).

What do older generations do when they want to invest? They get in touch with their broker and purchase investments. What do millennials do in this case? They prefer to use online investment instruments. When selecting an investment method, they rely on the speed of the instrument and its convenience. Traditional methods of raising capital are too clunky and time-consuming, so millennials are less likely to turn to them. Instead of personally visiting a company and collecting all the required documents, millennials choose to make a few clicks with their mouse. Previous generations think that this method is unreliable, with no guarantees, while millennials find the comfort that is their top priority.

According to a survey conducted by Provoke Insights, access to crowdfunding and asset sharing opportunities will expand in the future, bringing in even more investments from millennials. Because members of this generation grew up during times of economic instability, they seek out opportunities for creating alternative income sources to guarantee financial independence. For this reason, millennials are impatient and open to all offers. 91% of those surveyed by Provoke Insights were interested in partial ownership of previously illiquid assets, such as private startups, real estate, art, and others, which were recently tokenized.

How do millennials make investment decisions? 

Millennials rarely turn to financial consultants for support and advice, even if these specialists are more experienced. Millennials only trust their own instincts, and even if they’re looking for advice, they usually turn to their peers who share their values.

Born at the peak of technological development, surrounded by new devices and incredible scientific discoveries, millennials are always quick to react to developments in new industries. Millennials can also easily review products on offer, and they can estimate their future market demand. They only invest into the products they’d like to use in the future. Their financing decisions fully reflect their own interests and lifestyle. For instance, in 2018, millennials from Canada and the United States were most likely to invest in IT and cannabis companies.

In addition to satisfying their own needs through investing, millennials also consider the social and environmental consequences of their decisions. According to a Spectrem Group Research report in 2018, 52% of investors aged 25 to 40 included social responsibility in their criteria for selecting projects.

Because millennials mostly make investment decisions on their own, they mostly rely on their analytical skills. These investors conduct their own research related to projects and their founders. They understand risks and are able to evaluate them even better than previous generations. However, millennials also have weaknesses – some call them the generation of ‘instant gratification’: being accustomed to the concept of ‘profit here and now’, they don’t understand the value of long-term investments.

How can you attract a millennial investor to your crowdfunding campaign? Based on everything we’ve discussed earlier, we can highlight the following recommendations:

  • Pay attention to the issues that affect your millennial target audience: remember that they will only invest in products that they would use personally.  
  • Offer partial ownership to your investors, including tokenization. 
  • Highlight the social responsibility of your company, or the social significance of your project. Explain how investors’ capital will help a community or change the world. 
  • Keep in mind that millennials are impatient, and emphasize the uniqueness or limited availability of your offer. 

If you take advantage of this generation’s behavior, you will acquire powerful investors, and you will be able to rely on stable development for your project. Those who bet on millennials will never lose, because this generation is already controlling the world and the crowdfunding industry.

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