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Gen Z expects more than just VC’s cash

Does a shift in purpose cause the generation gap?

As the oldest generation’s members are turning 26, the 2023 Generation Z has undoubtedly been in the labor market for at least a few years already. There have been many questions on how the motivations and needs of the youngest employees will differ from previous generations. Indeed, several new ones were surprising for HR departments at the beginning, but for now, it seems that most companies have managed to adjust to them. 

The latest edition of McKinsey’s AOS Survey uncovers a generational gap in the workplace, with significant differences in how Gen Z and previous generations view themselves. It means that despite many efforts, the dissimilarities are still remarkable. Among many distinctions, Gen Zs are self-aware digital natives who care passionately about themselves, the environment, and cultural diversity. It also impacts the specific job roles that appeal to them in their career context. 

According to Glassdoor Economic Research, Gen Z employees feel most comfortable in positions that allow them to build company culture and have a social influence. They aim to achieve a work-life balance and prefer to work for socially aware yet large, established companies.

A new generation of startup founders has emerged.

In the context of the startup environment, generation Z members are not only new employees but also become founders. The innovative approach of these digital natives makes them natural-born startup initiators. At the same time, while approaching the capital market, it turns out that Gen Z is also more demanding when pitching to investors. The Connectd survey reveals that 80% of Gen Z founders value whether an investor has a relevant network and connections, and 96% of Gen Z entrepreneurs are willing to refuse an investment if the investor isn’t aligned with their moral values. 

Even in today’s challenging economic climate, it may come as a surprise that there are still things that money cannot buy. But, company founders from Generation Z appear to be setting new norms when establishing relationships with business angels and venture capital. Indeed, Gen Z founders are as diverse as the rest of society. Yet, when looking at their project’s purpose, the social and environmental impact they address looks like a remarkable shift.

Thankfully, both investors and new-generation entrepreneurs frequently have similar beliefs. A great example is a new wave of impact angel investors that do not prioritize return on investment when reviewing startup pitches.

Young entrepreneurs seek more than money can buy.

I asked Kasia Zalewska, an impact angel investor who funds startups that reduce carbon emissions, why new founders want more than money can buy. She and her Ragnarson team are a unique example of a company that exemplifies how Generation Z operates. As part of Ragnarson’s manifesto, this startup-targeted software development company believes in an open economy. The team has systematically reinvested the revenue in startup initiatives rather than using it. But, there is one essential requirement: the funded startups must be aligned with impactful values in promoting sustainable innovations.

When Gen Z founders pitch their ideas to investors, it is often evident that cash is not the only thing that matters. Kasia Zalewska explains that what new founders seek is, first and foremost, value alignment and working together to make the world a better place to live. Other factors that young founders value which investors may bring are, e.g., advisory assistance with all of the formalities they are not ready to handle or technical competence in terms of advising how to develop software, set up a tech team, or just guide the company in the proper direction.

Depending on the startup’s industry, the impact aspect may work in many forms. Here are some noteworthy examples of impact-driven startups that address emission reduction with their solutions either directly, but also indirectly:

Global Changer – a Berlin-based technology company that helps accelerate the decarbonization of SMEs and corporations. Their solutions help to understand, plan, act, and reduce emissions.

SAIZ – a B2B Fashion-tech startup offering sizing technology that helps brands produce better fitting products & consumers to buy the suitable sizes. Emissions reduction: decreases returns, the most significant cost leaver in e-commerce, and a critical pollution factor. 

Sykell – replaces single-use packaging with reusable containers that can be used hundreds of times in a circular loop. It enables the food industry to become sustainable conveniently, aiming to prevent tons of plastic packaging from being produced.

Willicroft ​​- an Amsterdam-based plant cheese manufacturer merging age-old traditions with high-quality ingredients to produce healthy food. Emission reduction: eliminates a massive footprint of livestock exploited in the dairy industry.

Bikefair – a marketplace for verified, secondhand bikes that aspires to make cycling the most accessible, autonomous, and sustainable mode of transportation. Emission reduction: it stimulates emission-free commutes and decreases waste by providing a marketplace for used cycles.

The industries in which new-generation startups compete, and the business ideas they bring are pretty diverse. But the joint result coming from adopting all these very different innovations, all such startups collectively cut carbon footprint. Although Gen Z founders and investors have the same business goal of profitability, their genuine motivator is making a difference. Contrary to investor expectations, many Gen Z founders make decisions based on elements that money cannot bring and evaluate their success not only with a return on investment.


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