Get All Access for $5/mo

How Venture Capital Can Help Young People Make an Impact Gen Z and millennials are more purpose-driven than ever before. From ESG investing to supporting social entrepreneurs, there are a number of ways that venture capitalists can help young people make an impact.

By Frederik Bussler Edited by Chelsea Brown

Opinions expressed by Entrepreneur contributors are their own.

Gen Z and millennials are more impact-minded than any previous generation. Growing up as digital natives, they've been exposed to the challenges facing our world in real time and are highly aware of the need to make a difference.

Constant headlines remind them of the mounting urgency to take action on climate change, social injustice and income inequality. They see firsthand how tech can be used to create solutions to these pressing problems. And they're not content to wait for someone else to fix things. They want to be the ones making an impact.

They're also well-positioned to drive change. As Deloitte reports, 71% of millennials and 70% of Gen Z report feeling "financially secure," and this isn't without reason: Millennials have higher inflation-adjusted incomes, higher net worths and more savings than previous generations at the same age.

Young people are also more educated than ever before, with 69% of millennials having some education beyond high school, compared to just 54% of boomers. With all of this knowledge and opportunity at their disposal, it's no wonder that young people are focused on making a difference.

Related: Why Millennials and Generation Z Love Impact Investing

Venture capital as the outlet for change

Venture capitalists have always been interested in making money, of course, but there's a growing recognition that VC can also be a force for good. As more young people enter the workforce with the desire to make an impact, VCs are increasingly looking for ways to invest in companies that are solving social and environmental problems.

One way VCs are doing this is by investing in sustainable enterprises, or businesses that combine a profit motive with a social or environmental mission. A recent Bain survey highlights that 70% of limited partners (LPs) include an Environmental, Social and Governance (ESG) approach to investing, and 85% of those LPs have an ESG policy fully or partially implemented in private equity.

VCs are also investing in companies that are using technology to solve problems in areas like healthcare, education and energy. These are the kinds of companies that can have a real impact on people's lives, and young people are increasingly interested in working for them.

The trend towards impact-focused investing is only going to continue as more young people enter the workforce with a desire to make a difference. VCs who want to stay ahead of the curve should start looking for ways to invest in companies that are making an impact. It's not just good for the world; it's good for business.

Related: Why Startups Focused on Solving Social Problems Are Attracting Investors

Barriers in the way

Venture capital investing, however, is not well-known for its inclusivity. High capital requirements, network-based dealmaking and lack of transparency can all act as barriers to entry for young people who want to get involved in the industry.

In lieu of opportunities to invest in private companies, many young people are turning to the public markets to make their impact. But while investing in publicly-traded companies can be a way to make a difference, it's not the same as investing in a company from the ground up.

Not just that, but public markets are failing to provide the kinds of returns that young people need to make a real impact. For example, the S&P 500 has only returned an average 11% internal rate of return (IRR), according to Cambridge Associates, while the average VC fund generates a 19% IRR.

With inflation eating into returns and consistently low bond yields, economists are forecasting "dismal returns" for the next generation of investors. In light of this, young people need to be thinking about how they can get involved in the venture capital industry if they want to make a real difference with their money.

While VC has long been the domain of the wealthy and well-connected, there are signs that this is changing. Platforms like Gridline, an alternative investment platform, are opening up access to the industry by enabling individuals to invest in a curated selection of professionally managed alternative investment funds.

Also, the SEC has recently relaxed the definition of an accredited investor, which opens up opportunities for a wider pool of people to get involved in VC. With more people than ever before looking to get into the industry, there has never been a better time to be a young person in venture capital.

Frederik Bussler

Marketing Consultant

Frederik Bussler is a marketing consultant for a wide range of businesses from startups to F500. Bussler is a published author and contributes to publications like VentureBeat, Forbes, Hacker Noon, and more. As a public speaker, he’s presented for audiences including IBM, Nikkei, and Slush Tokyo.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Editor's Pick

Business Solutions

Increase Productivity with This Microsoft 365 Subscription, Now $25 Off

It can make the entrepreneur life a lot easier.

Business News

Apple Pay Later Is Ending. Here's What's Taking Its Place.

The program was available for less than a year.


This Artist Answered a Businessman's 'Powerful' Question — Then His Work Became 'the Poster Child for Juneteenth': 'Your Network Really Becomes Your Net Worth'

Reginald Adams was the executive director of a Houston-based art museum for more than a decade before he decided to launch his own public art and design firm.


Harvard Business School Professor Says 65% of Startups Fail for One Reason. Here's How to Avoid It.

Team alignment isn't nice to have -- it's critical for running a successful business.

Business News

Here's What Companies Are Open and Closed on Juneteenth 2024

Since it became a holiday in 2021, Juneteenth has been recognized by some major corporations as a paid day off.

Growing a Business

I Hit $100 Million in Annual Revenue by Being More Transparent — Here Are the 3 Strategies That Helped Me Succeed

Three road-tested ways to be more transparent and build relationships that can transform your business — without leaving you feeling nightmarishly over-exposed.