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Millennials prefer investing in unlisted businesses

Millennials prefer investing in unlisted businesses

While a new wave of millennials are choosing social impact as their top business priority, a vast majority of young entrepreneurs prefer investing in private and non-listed businesses.

Angel investing is also making trend among this socially-conscious bunch who view it as a way to collaborate with their peers.

These findings stem from a new study by HSBC Private Banking, quizzing over 3,700 successful entrepreneurs in eleven countries.

According to the bank’s Essence of Enterprise report, in Asia Pacific, millennial entrepreneurs are leading the way when it comes to building social and environmental impact into their business models.

Thirty-four percent of entrepreneurs aged under 35 identified impact as their chief motivation compared to 14% of those aged 55 and over.

What’s more, some 32% said they started their ventures with the intention of creating positive social impact.

‘It’s clear millennial entrepreneurs want to do good, but it would be wrong to dismiss this as youthful idealism that will act as a brake on financial success,’ said Siew Meng Tan, regional head of HSBC Private Banking, Asia-Pacific.

‘They know that their business cannot have the impact they are looking to make without sustainable growth, and they are focussed on achieving both.

‘They see a similar compatibility when it comes to angel investing; they are happy to invest in the wider business community, to contribute to each other’s successes and to learn from one another,' she added.

The study found that almost six in ten business owners under the age of 35 have invested in non-listed businesses, compared to only three in ten owners over the age of 55.

In Asia Pacific, about 45% of the respondents have invested in other private and non-listed businesses, most notably in Mainland China at 53%. In addition, 56% of entrepreneurs under 35 undertake angel investing compared to 36% of entrepreneurs aged over 55.

Millennials view angel investing as a way of staying up-to-date with industry trends, to collaborate with peers, as well as grow their expertise. The older generation, on the other hand, view angel investing as a way to diversify their investment portfolio.

On a global scale, the research found that crowdfunding platforms are almost twice as popular as a means to source investments among those under 35 years old.

‘This is especially in demand in continental Europe, notably in France and the UK, where over one third of investors are using such platforms,’ HBSC noted in the report.

When asked about the types of education and learning that have contributed to their success as business owners, millennials in Asia Pacific cited professional development and mentoring as the most influential.

Some 27% from the under 35 group regularly turned to business leaders to act as a mentor to them. 

Those over 55, however, said their own experiences were most influential. Only 17% were open to mentorship. 

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