How Millennials are disrupting the global investment landscape

07 December 2017 @ 8:00am Investing Insights

7.1 million is a big number. That’s roughly how many of us – millennials – are out there in Australia today.[1] So, it’s no surprise that the way we prefer to invest our money will significantly shape the investment opportunities that will be available. The rise of ‘impact investing’ – investing in companies that represent a positive effect on society –  is certain to influence the investment landscape. More than any other generation, millennials believe that investment decisions represent one’s social, political and economic values. As a result, most of us would prefer not to invest in a company that has a negative impact on society despite potentially high financial returns.

Impact investing has been on the rise in recent times, especially amongst younger investors. In fact, many millennials around the world thought that the number one priority of businesses should be ‘to improve society’.[2] The emerging generation of investors don’t just pursue financial benefit – they also seek social benefit. Members of the Stanford Business School state that “More and more students who are graduating from top business schools are not looking to merely make money in their careers but are also looking at the social and environmental impact they can have.” The millennial generation has a new world view. They value democratic leadership, empowerment, entrepreneurship and businesses with positive impacts. They want to invest impactfully in companies that align with their personal values.

So, we know that millennials want to invest with impact and that there are a lot of them out there. The next logical question is, ‘Will they have enough money to support their investment ideals?’ The answer is an unequivocal YES. This millennial generation is set to inherit an unprecedented amount of wealth. In the US alone, millennials are expected to inherit more than $30 trillion from their baby boomer parents.[3] In fact, in Australia, millennials are predicted to earn two out of every three dollars of income generated in Australia by 2030. The bottom line is that these millennials are going to have money. A lot of it. But they are not going to invest it like their predecessors, as we can learn from their radically different investment portfolios. According to the ‘Millennials and Impact Investing’ 2016 Toniic report, 72% of millennials intend to allocate more of their portfolio to ‘impact assets’ (assets that have positive impacts on society) within the next 5 years. 10% of the millennials surveyed have already moved 90-100% of their personal assets and/or their family’s assets to ‘impact assets’.

The 2016 Toniic report further claims that millennials ‘overwhelmingly want more access to impact investments’. Since many of the equity crowdfunding companies looking to raise capital have an aim to make our world a better place, it is very likely that millennial investors will be attracted to this form of alternative investment. Don’t believe me? In the US, millennials comprise almost half of all investors who back crowdfunding campaigns on platforms such as Kickstarter and Indiegogo.[4]

Equity crowdfunding will soon be live in Australia via licensed platforms such as OnMarket. Innovative and growing small and medium sized companies that want to bring about change, and need capital to grow their business to the next level, will no doubt turn to equity crowd funding as it provides a fantastic gateway to access the millennial generation. Millennials have the motivation, and have the dollars to invest in companies bringing about change. It’s a win-win for everyone.

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OnMarket makes investing and capital raising an efficient, simple and transparent process that is accessible to everyday investors and businesses making a change in the world. OnMarket has recently applied for an equity crowdfunding licence and will soon enable equity crowdfunding, connecting investors with businesses that are making a change for the better. By investing in companies offering equity via OnMarket, everyday investors can share in the upside in businesses that ultimately will make a better, smarter, more sustainable world.

To read our comprehensive guidebooks showing you how to raise capital for your business go to www.onmarket.com.au.