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Authored by:

RLC Ventures

September 2018

THE RISE OF THE MILLENNIAL

ENTREPRENEUR AND INVESTOR

MILLENNIALS IN

THE INVESTMENT

LANDSCAPE 2018

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3 Executive summary

5 Introduction

8 Key findings

17 Conclusion

19 About us

20 Acknowledgements

Contents

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3

Executive Summary

The millennial generation plays an increasingly important role in the investment

ecosystem as both entrepreneurs and investors. Our primary and secondary research –

consisting of surveying appropriate entrepreneurs and analyzing external studies

(Section 1.2) – has produced findings which highlight a number of problems and

opportunities regarding the millennial generation. On average, they are the most

successful entrepreneurs in history, yet are largely overlooked by traditional seed-stage

investors who tend to be older and lack diversity.

The Millennials in the Investment Landscape 2018 Report highlights several key

themes:

Capital is less accessible for younger entrepreneurs, despite generating larger

profits, revenue and creating more unicorns than previous generations.

The findings indicate that a staggering 67% of companies at $1 billion

valuations are founded by entrepreneurs younger than 35. Despite this,

millennial founders feel their age is a significant limiting factor to receiving the

investment required to grow.

There is a lack of millennial seed-stage investors in the UK, despite a demand for

them

Our survey highlighted that millennial founders would prefer investment from

investors in their own demographic. Despite this, UK seed-stage investors are

dominated by people older than 45.

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4

Millennial entrepreneurs are socially responsible and are motivated by making a

meaningful impact on the world

Our survey results found that the negative values often associated with

millennials (i.e. lazy, entitled) are mere fallacies. In fact, millennials hold socially

responsible core values and are more motivated by making a positive change in

society relative to baby boomers.

Millennials are more entrepreneurial, innovative and successful than preceding

generations

Primary and secondary research found that millennial entrepreneurs are a

generation unfearful of pushing boundaries, taking risks and failing, having

launched more businesses than the baby boomer generation. They are also, on

average, more successful than previous generations in terms of revenue and

profit margins.

Millennial entrepreneurs are ethnically diverse, yet there is a lack of diversity

among seed-stage investors in the UK

Entrepreneurs come from a broad range of ethnic backgrounds, especially in

London. Despite this being an important factor for founders, UK investors

overwhelmingly lack diversity with only 7% coming from an ethnic group other

than white.

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This chapter provides an overview of millennials and their contribution to the economy

as investors and entrepreneurs (Section 1.1). It then introduces the survey that RLC

Ventures undertook which gives further insight into millennial entrepreneurs in the UK

(Section 1.2).

Millennials are the generational demographic following “Generation X”, who are born

between 1983 and 2000 (and therefore are aged 35 or younger) and the first

generation to come of age in the new millennium. Preceding generations often

stereotypically view millennials as “lazy”, “entitled”, “selfish” and “shallow”, and treat

them almost like an alien species in business. However, RLC Ventures’ findings suggest

this is completely unfounded.

“There are a lack of

young and diverse seed-

stage investors who can

truly connect with the

millennial entrepreneur.”

” The millennial generation are now the most

important group in today’s economy – creating

more businesses, easily adopting new

technology and spending more than ever. As

one of the largest and most diverse generations

in history is about to move into its prime

spending years, millennials are truly shaping the

economy.

Introduction

Who are millennials and why are they important to theinvestment ecosystem?1.1

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Not only will they impact businesses as a new breed of consumers, but also as

innovators, investors and driven entrepreneurs (coined “millennipreneurs” by BNP

Paribas); seeking to change the world through developing their promising companies.

Eager to truly make a positive difference to society via their businesses, millennials are

the most entrepreneurial generation in history.

80%

80% of the 500 most valuable tech companies in the last 30 years started by

founders in their twenties and thirties

It is clear that we are now dependent on millennials to drive important innovation and

enterprise in today’s economy. As funding is required for this to occur, millennial

founders now demand more venture capital and angel investment than ever before and

are therefore vital to the investment ecosystem.

The problem, however, is that

millennial founders are often

overlooked by traditional and older

investors who lack diversity. In

contrast, young and diverse

investors are more easily able to

understand and resonate with the

evolving values, trends and

situations important to millennials.

This allows them to make better

investment decisions as they are

able to closely relate to the

millennial generation. The

underlying problem is that there is

a lack of young and diverse seed-

stage investors that can connect

with the millennial entrepreneur

despite the great demand.

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Figure 1.1 Source: The Twenty Minute VC (2018)

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The survey was created and promoted extensively by RLC Ventures via direct contact

with millennial entrepreneurs as defined in Section 1.1. Screening questions ensured

that respondents were millennial founders who work full-time in their respective

companies and are currently seeking or have already received investment. The online

survey contained 14 questions predominantly consisting of unbiased multiple-choice

questions.

Survey methodology and sources1.2

With 159 respondents to our survey, every

effort was made to reach as many qualifying

entrepreneurs as possible. However, these

results require careful interpretation, and direct

comparisons with previous studies need to be

treated with caution. That said, the research

undertaken by RLC Ventures represents a

detailed overview offering insights into the

attitudes, motivations and activities of millennial

entrepreneurs and investors. The entrepreneurs

in our survey had an average age of 32 and

therefore can safely be considered as

“millennials” as defined in Section 1.1.

Other data was retrieved from reliable and well-

known sources which are cited at the end of the

report.

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Our survey and wider research produced a number of findings which we have

summarized and presented in this section. The results are interpreted to highlight

important challenges for the venture capital industry, millennial entrepreneurs, and the

wider investment ecosystem that must be addressed.

Data collected of “unicorns” – private, VC-backed companies valued at $1 billion or

more – found that

with the average age just over 31 and median at 30. Furthermore, the breakdown

highlights that entrepreneurs in their twenties are very well-represented among the

most successful entrepreneurs.

Overall, we can conclude that founders under the age of 35 represent the majority of

founders in the billion-dollar club.

Moreover, founders on the billion-dollar list are younger than tech entrepreneurs on

average. Historically, 80% of the 500 most valuable tech companies in the last 30 years

were founded by entrepreneurs in their twenties and thirties. Overall, this suggests that

successful entrepreneurs who create “unicorns” – the companies all investors are

hunting for – are overwhelmingly young and therefore must be focused on more.

67%67% of unicorn founders were younger than 35 years old

Key Findings

Capital is less accessible for younger entrepreneurs,despite being more successful2.1

Figure 2.1 Source: Harvard Business Review (2014)

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who have easier access to funding. Although the most successful entrepreneurs are

young, they are unfortunately being overlooked by seed-stage investors. Furthermore,

the US Chamber of Commerce found that millennials say the ability to get a loan or

credit is their single biggest challenge to starting a business, with two-thirds saying

that they do not receive enough support from banks when raising funds.

Overall, age seems to be a significant limiting factor for entrepreneurs when it comes

to accessing funding.

Paradoxically, our survey found that

Figure 2.2 Source: RLC Ventures Online Survey (2018)

82%

of millennial founders felt more capital is invested in older and

experienced entrepreneurs,

Figure 2.3 Source: Harvard Business Review (2014)

0

5

10

15

20

25

<20 20-24 25-29 30-34 35-39 40-44 45-49 >50

Pe

rcen

tage

of c

om

pan

ies

Age at incorporation

FOUNDER AGE OF $1 BILLION VC-BACKED PRIVATE COMPANIES UPON INCORPORATION

67% of unicorn founders were

younger than 35

%

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This is an underfunded yet high-returns potential market for millennial investors who

are likely to better understand, communicate, and resonate with younger startups in

order to grow and develop them more effectively.

75% of which are over

45 years old…

7540

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…40% of whom are

aged between 55 and

64

Only 21% of seed-stage investors

are between the age of 18 and 34

Some of the reasons included: millennial investors would be more familiar with the

significant problems technology startups are tackling and can more easily understand

the solutions they are trying to achieve, allowing them to be of greater help for their

growth and development.

Conventional wisdom may suggest an older investor possesses the experience and

knowledge required to help develop a startup, but our survey findings suggest

otherwise.

This is a problem as our findings confirm there is a great demand for seed-stage investors:

79%would be more likely to accept

the same term sheet from a

millennial investor rather than

an older one

71%of millennial founders would

be more open and transparent

with an investor of a similar

age to them

There is a lack of millennial seed-stage investors,despite a demand for them2.2

Figure 2.4 Source: British Business Bank (2018)

Figure 2.5 Source: RLC Ventures Online Survey (2018)

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In London,

0

5

10

15

20

25

30

35

40

45

42%

19%

42% of startups are founded by

immigrants or an ethnic minority compared

to a global average of just 19%.

This highlights the incredible amount of

diversity within early-stage companies in

London and suggests a need for diversity in

investors.

93% of seed-stage investors are white

7% of investors identified as an“other ethnic group”

7%

93%

Unfortunately, there is a significant lack of ethnic diversity amongst UK seed-stage

investors, as shown in Figure 2.8.

There is a stark contrast between the amount of diversity among startup founders and

their potential investors which must be addressed.

59% were “more comfortable” with an investment from a millennial than an older investor.

57% of founders would be “very confident” with a millennial investor’s judgment.

Ultimately, Figures 2.4 and 2.5

clearly highlights that despite a

great demand for millennial

investors by young founders, there

are not enough out there – an issue

that must be addressed.

Millennial entrepreneurs are ethnically diverse, yetthere is a lack of diversity in seed-stage investors2.3

Figure 2.6 Source: RLC Ventures Online Survey (2018)

Figure 2.7 Source: Startup Genome Report (2017)

Figure 2.8 Source: British Business Bank (2018)

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Evidence from the US Chambers of Commerce suggests that individuals tend to invest

in “people like them”. Therefore, the effect of a more diverse seed-stage investor

community is incredibly powerful as it would broaden the range of founders receiving

investment for their startups.

With the majority of millennial entrepreneurs highlighting the importance of diversity

in their investors, this is a problem that must be tackled.

83% of millennial founders believe an

investment from a venture capital firm

with a more diverse background is more

helpful than one with less diversity. 83%

This highlights an important entrepreneurial mind-set and motivation which increases

the chances of creating a successful company.

81% of millennial founders said that

they preferred to make a positive

difference rather than gain professional

recognition as an entrepreneur.

81%

Millennial entrepreneurs are a generation motivated bymaking a meaningful social impact2.4

Figure 2.9 Source: RLC Ventures Online Survey (2018)

Figure 2.10 Source: RLC Ventures Online Survey (2018)

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said it was to

pursue their

passion

said it was to make a meaningful,

positive difference to society

of millennial founders stated that the most

important reason for creating a company

was for extra income or to become rich

39

43

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18%

43%

39%

These results strongly suggest millennial entrepreneurs are less motivated by personal and

pecuniary benefits than by making a genuine, impactful difference. These core values imply

a new breed of entrepreneurs who are aiming to fundamentally better society.

39%

46%

of “millennipreneurs” say they define their business success in terms of social impact compared to…

46%

of the average entrepreneur39%

Figure 2.11 Source: RLC Ventures Online Survey (2018)

Figure 2.12 Source: BNP Paribas (2016)

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In the US, HSBC found that 69% of millennial entrepreneurs said that having

a positive economic impact was a factor in their decision to start a business,

with 59% saying they want to have a positive impact in their community.

Millennial entrepreneurs are also incredibly socially-oriented, with 57%

stating that spending time with friends and family gives them the most

happiness in life; greater than a high level of income or wealth. This

highlights the priorities of millennial founders who are increasingly less

motivated by money and are more focused on developing a company that

will leave a lasting impact.

As the most multicultural generation, millennials also

prioritize diversity and inclusion:

70% of millennial founders state that

diversity and inclusion considerations areimportant in their own business decisions

Overall, millennial entrepreneurs hold socially-responsible values and are

motivated by making a significant difference which is distinctive from preceding

generations. These values are conducive to building a successful, sustainable and

highly-valuable company. Therefore, backing millennial founders makes rational

economic sense from an investor point of view.

Figure 2.13 Source: RLC Ventures Online Survey (2018)

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90% of millennials agree that being an entrepreneur is a mindset rather than a role of a

business owner. This view makes millennial entrepreneurs more committed to

developing their business than previous generations, increasing their likelihood of

success.

The US Chamber of Commerce found that millennials launch almost 160,000 startups

each month, more than any other generation in history.

Millennials are relatively more entrepreneurial,innovative and successful than preceding generations2.5

0 2 4 6 8 10

Millennials

Boomers3.5

8

The millennial generation have

launched almost 2xas many companies as baby boomers –8 companies each

versus 3.5 for baby boomers.

0 10 20 30 40

35

27

Year

s o

ld

While the older generation launched their first businesses at around 35 years old…

…the average age of millennial entrepreneurs is just 27 years old.

Figure 2.14 Source: BNP Paribas Wealth Management (2018)

Figure 2.15 Source: BNP Paribas Wealth Management (2018)

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This shows that millennials are more willing to start a new company than previous

generations.

Millennials are also more successful entrepreneurs with a 43% greater turnover than

the baby boomer generation and a 5.1% larger profit margin – most likely due to a

greater level of education and values mentioned in Section 2.4.

Entrepreneurs in their 20s oversee businesses that turnover on average $13.1m,

compared to $9.7m from businesses run by people in their 50s, according to a survey

of over 4,000 entrepreneurs in 11 countries with a minimum income of $250,000

(Figure 2.16).

The substantial increase in willingness to take the risk to create and develop a company

has made millennials the most entrepreneurial generation in history. More importantly,

they are also more successful entrepreneurs and therefore must not be overlooked by

investors in search of their next unicorn. In fact, they must emphasise youth as a key

criterion when targeting their next investments.

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Average turnover of businesses by age cohort of founders

20s

50s$9.7m

$13.1m

Figure 2.16 Source: The Financial Times (2017)

Millennial entrepreneurs generate a 5.1%

larger profit margin than baby boomers

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Millennials are vital to

the investment

ecosystem going

forward and must be

focused on by seed-

stage investors

The problem is that there is a lack of

youth in early-stage investors, with the

majority of seed-stage investors being

older than 45 years old.

This poses a huge limiting factor to

high-potential startups who are unable

to receive the finances required to

grow.

Conclusion

The research highlighted in the

report has provided valuable insights

into how important the millennial

generation are and will continue to

be, as both entrepreneurs and

investors.

Firstly, millennial founders trust

younger investors of a similar

demographic more than traditional

and older investors. The main reason

for this is that young investors are

able to understand developing trends

and situations better as new

technology is being applied to a

range of emerging industries.

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Furthermore, diversity is an increasingly

important consideration for entrepreneurs

and early-stage investors alike. Diversity

allows investors to form a holistic view of

potential investments and remain truly

unbiased in decision-making, allowing

better investments to be made. Therefore,

the astounding lack of ethnic and gender

diversity in seed-stage investors is a

fundamental problem that must be

addressed by the investor community.

The entrepreneurial mind-set of

millennials will play a huge role to support

and accelerate global economic growth

and productivity, helping to reverse a

declining trend of business startups. This

highlights a need for change in the

approach by investors, who must not only

be open to but also be focused on backing

millennial founders who are more likely to

create the next unicorn they have been

seeking.

Moreover, the more successful entrepreneurs were found to be younger. Not only are

millennials willing to take risks and be more entrepreneurial, but they are better at it

than preceding generations. Having started more companies, generated more revenues

and reached more billion-dollar valuations, millennial entrepreneurs should be an

investor’s golden ticket for a unicorn in their portfolio. Irrationally, however, they are

continued to be overlooked by traditional investors. This presents a strong business

case for millennial early-stage investors who can profit by focusing on similar-aged

founders.

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This is a powerful entrepreneurial

mindset which is more effective to disrupt

outdated industries or create entirely new

ones in order to improve society.

Additionally, millennial entrepreneurs are motivated more by creating a genuine social

impact, rather than making money.

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RLC Ventures is an award-winning venture capital firm that invests with a thematic

approach in high-growth potential, seed and early-stage companies run by millennial

founders across 5 verticals: Proptech, Fintech, Enterprise, AI and Social Impact Tech.

We are the only venture capital firm that commits to a “Venture Impact Pledge” to give

a portion of our exit profits to social causes of the founder’s choice. This aligns our

investment with the socially responsible values held by our young founders to make a

positive impact on society.

“The conclusions derived from our in-depth research compiled in this report has truly

formed the foundations of RLC Ventures’ unique investment thesis – backing young,

millennial founders who are innovative, passionate and are solving real-world

problems.”

– Founder & CEO, Reece Chowdhry

We back extraordinary founders and allow them to

excel exponentially. Our strategy is clear - we invest

in early-stage and scalable tech businesses that will

shape the future.

More information about the RLC Ventures team, portfolio and investment thesis can be

accessed via the website:

www.rlc.ventures

About us

“

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Acknowledgements

Endnotes

1. BNP PARIBAS (2016). 2016 Global Entrepreneur Report: “The Emergence of

the Millenipreneur”. https://group.bnpparibas/en/news/bnp-paribas-global-

entrepreneurs-report-2016

2. BNP PARIBAS WEALTH MANAGEMENT (2018). Today’s Elite Entrepreneurs:

Searching for Positive Impact. https://wealthmanagement.bnpparibas/en/expert-

voices/entrepreneur-report-2018.html

3. BRITISH BUSINESS BANK (2018). The UK Business Angel Market.

https://www.british-business-bank.co.uk/wp-content/uploads/2018/06/Business-

Angel-Reportweb.pdf

4. FINANCIAL TIMES (2017). Tech-savvy millennial entrepreneurs steal a march

on their parents. https://www.ft.com/content/29f3c6b6-5289-11e7-bfb8-

997009366969

5. GOLDMAN SACHS (2018). Millennials Coming of Age.

https://www.goldmansachs.com/insights/archive/millennials/index.html

6. HARVARD BUSINESS REVIEW (2014). How Old Are Silicon Valley’s Top

Founders? Here’s the Data. https://hbr.org/2014/04/how-old-are-silicon-valleys-

top-founders-heres-the-data

7. HSBC PRIVATE BANK (2018). Essence of Enterprise 2018.

https://www.hsbcprivatebank.com/en/discover/our-insights/essence-of-enterprise

8. STARTUP GENOME (2017). Global Startup Ecosystem Report 2017.

https://startupgenome.com/report2017/

9. THE TWENTY MINUTE VC (2018). Episode 22: Deliver with Paul Hsiao,

Founding Partner at Canvas Ventures. The Twenty Minute VC. [Podcast]

Available at: https://itunes.apple.com/gb/podcast/twenty-minute-vc-venture-

capital-startup-funding-pitch/id958230465?mt=2&i=1000408473482

10. US CHAMBER OF COMMERCE FOUNDATION (2012). The Millennial

Generation Research Review.

https://www.uschamberfoundation.org/reports/millennial-generation-research-

review

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This paper was developed by the RLC Ventures Team including Reece Chowdhry, AmarPatel, Alex Valente Petri, Jay Jung and Harein Uppal.