Affluent millennials ready to be tapped for angel investment opportunities
As investors err on the side of caution amid economic concerns, research published today suggests that appetite for business investment remains high, particularly among millennial investors.
A survey by UK law firm Michelmores of affluent millennials, Gen X and baby boomers found that nearly half (49%) have invested in a business in the last two years, often citing motivations that go beyond pure financial return. This includes investing in their own business (28%), an established businesses (15%) or a start-up (6%).
Entrepreneurial millennials are significantly more likely than older generations to have invested in a business, with 59% of Gen X and 89% of baby boomers not investing in any business in the last two years.
The data also revealed a stark disparity between the number of millennials that would consider angel investing (82%) versus the number that already are angel investors (2%). Nineteen per cent of millennials don’t consider themselves to have sufficient funds to be an angel investor – despite 44% of those interest having over £100,000 of investible assets – and 32% perceiving it to be too high risk. However, 15% said they simply don’t know how to become an angel investor, indicating that with the right level of targeted education on the process, this generation could offer a significant proportion of untapped resource for businesses seeking investment.
More Gen X respondents are already angel investors than the other generations surveyed, but this figure is still extremely low (3%). However, with two thirds stating they would consider angel investing, this generation also offers a likely source of investment for fledgling or growing businesses.
Unsurprisingly, the data showed that interest in angel investing wanes in the older generations, with just 2% of baby boomers stating they would ‘definitely’ consider it. Statements made by respondents of this generation included that they felt ‘too old’ to ‘wait for a new investment to blossom’ and didn’t ‘take risks’ with their money at their age.
Chloe Vernon-Shore, senior associate at Michelmores, says: “Angel investment is such a fascinating asset class, offering incredibly valuable opportunities for the investor and the investee company. The perception is that angel investment is reserved for the wealthy elite, despite individual investments in a single venture starting from £5,000 – and sometimes as little as £1,000 with the right special purpose vehicle in place.
“Like anything, raising awareness is key to growing this asset class and making it more accessible to individual investors and potential investors and to start-up and scale-up businesses.
“The data suggests that businesses seeking investment should target their efforts at affluent millennials, who are most likely to have a longer-term outlook and the appetite to become an angel investor.”
