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Earlier this year, Johnnie Yu heard that a new company hopes to raise a small amount of capital. He liked the idea, so he cut the check. Yu is 21 years old, a junior at New York University.He too Angel investor, Provide funding for start-ups as early as possible. His investments are small (usually around $2500), but they are real: in exchange for money, if the company succeeds, he will get a small part of the company’s future equity. He believes that his investment in emerging technology startups is a supplement to his parents’ asset portfolio, which is composed of traditional assets such as real estate.
So more and more Generation Z investors Who started to leave their mark on the entrepreneurial ecosystem. Some of them are now old enough to work in venture capital companies or as investors. Others, such as Yu, are new angel investors because the new platform and recent regulatory changes have expanded the range of people who are eligible to participate. Like-minded young people gather on TikTok and Twitter to talk about the valuable connections and transaction flows that startups can bring. A Slack organization called Gen Z VC has more than 7,000 members, many of whom are still in their teenage years.
For many Gen Z investors, angel investment is not just about getting rich, but about participating in the entrepreneurial economy for the first time. “Everyone obviously wants a return, but most of the time you will lose money,” said 22-year-old founder Dayton Mills, who has already started angel investing. “A lot of times, you are buying access and want to get closer and closer to people. This may have a greater impact than your investment itself.”
Historically, angel investment has not attracted young people due to the wealth requirements set by the Security and Exchange Commission. Anyone can buy the stocks of public companies, but investment in private companies is more risky and speculative, which leads to stricter supervision by the SEC. Since the 1930s, only people with an income of more than US$200,000 or a net worth of at least US$1 million can make angel investments. This does not include most Americans, and of course most young people.
Two regulatory changes have made investments more accessible: In 2016, the SEC enacted new rules that allow startups to raise more funds through equity crowdfunding and conduct smaller checks on people who do not meet the definition of an accredited investor. Last year, it separately relaxed its requirements for qualified investors, allowing people who have “knowledge of the private market” to become angels. Now, even if they do not meet the SEC’s wealth requirements, people who work for private funds or pass a license exam to prove their “financial maturity” can participate. Those who do not can still concentrate their funds in a special purpose tool in which the main investor represents a group of people and combines their investment into a group.
Mills and Yu are members of the Gen Z VC Slack group and recently joined a group of new dating startups called Snack. Its founder, Kim Kaplan, is a millennial and a veteran in the dating industry. He actively attracted generation Z investors and allocated $500,000 in Snack’s latest round of financing to the AngelList The Z-Generation Group was established on the platform, which is a platform to match startups with investors. Kaplan also raised funds from traditional venture capital firms, but she believes that attracting young investors is also important because it allows her to directly reach target users. She said: “What surprises me is that there are more companies that have not gone this way.” “Why are your customers not at the gaming table?”
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