Meagan Loyst had wanted to be an investor since her freshman year of college. While at Boston College, she interned at hedge fund Perry Capital, which led her to wonder what specific kind of investor she wanted to become.
After graduating college in 2019, Loyst, 24, worked briefly in growth equity. She realized she wanted to collaborate with companies that were early in their development, so she sent a cold email to Andrea Hippeau, partner at early-stage VC Lerer Hippeau. And the rest is history.
Loyst, now an associate at Lerer Hippeau, is just one of an increasing number of Gen Zers seeking careers in venture capital. Venture firms, meanwhile, are hiring a younger and often diverse crop of investors who have grown up aware of how venture capital operates and who have ideas about how to approach innovation.
They are true digital natives and have shown an ability to easily transition between new digital platforms. For the venture community, which is no stranger to generational transitions, Gen Z represents a workforce eager to make a change in an industry that is starting to value more diversity and focus on impact.
“Gen Z is incredibly entrepreneurial and so naturally we’re pushing the boundaries on what is traditional in VC, from career paths to sourcing”
Although they are young and still starting out, it seems Gen Z is ideally suited for work in venture capital and is already looking at how its unique position in society can push the boundaries of venture investing further. With their numbers in the workplace expected to triple in the next decade, Gen Z is certain to mold the future of venture capital.
Talking about their generation
Loyst founded the group Gen Z VCs in a bid to connect with young investors like her.
“Many venture firms are realizing the importance of hiring younger folks on their teams,” she says. “Diversity in age and thought helps [organisations to] make more informed decisions, and this includes the Gen Z point of view.”
Gen Z, an oft-derided and simultaneously admired generation, spans anyone born between 1997 and 2012, according to the Pew Research Center. The eldest Gen Zers are now 24 and have already entered the workforce. The Gen Z workforce is due to triple by 2030.
The generation, though, currentl makes up only a small percentage of the VC workforce. The third VC Human Capital Survey from Deloitte, the National Venture Capital Association and Venture Forward showed that millennials – people born between 1981 and 1996 (the oldest being in their 40s) – comprise not only the largest generation in the US but include many people who work in venture capital.
To a large extent, Gen Z is continuing in the footsteps of previous generations. The venture world was founded on people taking chances on unproven companies and technologies. Previous generations have used the industry as an avenue to make money but also to expand access to innovations.
One of the more popular perceptions of Gen Z is that its members are passionate about activism and exhibit an outspoken, even confrontational, streak, which the generation has been known to wield like a weapon.
The Gen Z generation grew up in a time of societal upheaval and have seen first-hand how vital equity and diversity are. This has informed so much of their worldview that it is almost inescapable for many of them to want to put impact first, even if they work as investors. Diversity and impact have become touchstones for many VCs, who understand that diverse networks yield more untapped founders and deals.
It’s good to do good
In many ways, Gen Z VCs exemplify this way of thinking. Although other generations, particularly millennials, see the value of diversity, many Gen Z adults were raised around the idea of doing social good. There is a perception that Gen Zers are more socially aware and have taken up causes close to their hearts. They are acutely aware of their impact on the world and were raised in a more digitally connected way than previous generations. They also are not shy about putting their beliefs and values at the forefront of their professional aspirations.
The venture community is now experiencing the same progressive transformation. Firms are seeing the value of diversity and impact – such as by investing in efforts to tackle climate change, hiring diverse personnel and investing in start-ups with diverse leadership – and are taking steps to put their money where their mouths are.
“When I look at young people today, they definitely want to have a successful professional career, but they want to be in a place that supports their mission… somewhere where they can grow
Part of the attraction for Gen Z is that venture capital offers workplace flexibility and the ability to have influence in a chosen cause.
Venky Ganesan, partner at Menlo Ventures, believes Gen Zers want to work in a place where their values are cherished.
“When I look at young people today, they definitely want to have a successful professional career, but they want to be in a place that supports their mission,” he says. “They want to be somewhere where they can grow and learn.”
Venture capital lets people set their work hours and can make it easier to have a clearer delineation between someone’s work and personal life. So not only does it offer Gen Zers the chance to invest in companies they believe in; it gives them the freedom to work wherever they feel closest to potential start-ups. It is also never boring.
These may be reasons why venture capital attracts younger people who have begun thinking of it as a career.
Venture has seen more mainstream interest in the past couple of years. Jeff Harbach, president and chief executive of Kauffman Fellows, points to venture’s increasing ubiquity as one reason many Gen Zers see it as a potential career path.
“VC has become popularized through great entrepreneurs and even through TV shows like Shark Tank, where companies pitch their ideas,” he says. “Most technology companies everyone knows were also venture-backed.” He notes that many of the Gen Z fellows at Kauffman are passionate about social issues and diversity. They feel they can make a significant difference through their participation in the asset class.
“VC has become popularized through great entrepreneurs and even through TV shows like Shark Tank, where companies pitch their ideas. Most technology companies everyone knows were also venture-backed”
Harbach adds that venture, though closely related to innovation, has not traditionally embraced change well simply because it never had to. But now, many venture firms are turning to new funding mechanisms and are rethinking how they can deploy their capital and benefit a more diverse set of founders. For Harbach, this offers more opportunities for younger VCs to make their mark in the industry.
VCs like Loyst see themselves changing the venture world, especially when it comes to finding new founders to work with.
“Gen Z is incredibly entrepreneurial and so naturally we’re pushing the boundaries on what is traditional in VC, from career paths to sourcing,” she says. “Also, we care about impact as a generation, and in VC you get to have enormous impact in being on the ground with founders who are building the companies of the future.”
This sentiment is echoed by many Gen Z VCs who say they turned to venture capital because they saw it as a way to do something impactful and because they genuinely love learning about innovative technologies and being close to innovators.
Ganesan says he fully believes Gen Z VCs can push for change within the industry. He says this up-and-coming generation has a firm grasp of identity and that Gen Zers will fight to get whatever they believe could be good for them or the world they live in.
The young and the restless
But while younger VCs see themselves changing the industry, they are still newcomers and do not have the experience older partners may have.
Some within the industry note that a successful VC will still need to have a good spread of generations and experience. Founders may prefer to work with investors who have guided other companies to IPOs or have a network.
“It’s becoming a career for people hoping to shift into areas where they
can use their expertise for the
Newton Venture Program
Enthusiasm does not necessarily mean untold wisdom. Ganesan points out that Gen Z VCs are much like other people just starting out in VC: they are new investors still figuring out what exactly makes a good investor great. He says it is not always easy for someone new to the business to understand that putting capital towards a start-up is not what makes a good investor; it comes instead from the ability to guide and scale a company. This is the kind of learning that does not necessarily come with age but through experience in the industry.
With more people going into venture investing, programs like the Kauffman Fellows, Newton Venture Program and Venture University aim to provide practical experience, access to master classes and a head start in building a network of founders and LPs.
Newton Venture Program managing director Eleanor Kaye tells Venture Capital Journal that more people from diverse backgrounds and generations are participating in the program, which is indicative of an ongoing interest in making a career in venture. The majority of the Newton program participants
“It’s becoming a career for people hoping to shift into areas where they can use their expertise for the way forward, especially for Gen Z who are so impact-focused and they’ve realized they have to get to the source to find inclusive or impact-led companies,” she says.
Many of these venture training programs also make it a point to attract diverse participants, which illustrates how ubiquitous venture has become.
It has also allowed for people with less traditional paths to enter the industry.
Getting in tune
All generations have something to offer a VC. But Gen Z offers something extremely valuable: a close kinship with the sector of the population that is particularly in tune with technology.
Anup Chamranjnagar, vice-president at Point72 Ventures and himself a member of Gen Z, says that VCs understand that they need a younger perspective, but few offer junior roles. Now, there is a lower barrier of entry to come up with a company, so younger founders are abundant. However, VCs often do not have enough entry-level investment roles.
“I am hopeful that funds will continue to look for the next generation of talent who are closer to the issues at hand,” he says.
He adds that venture firms know building a team connected to the market with a diversity of thought becomes the best way to find good companies. It also allows for a deeper understanding of the world and the next generation of consumers.
Its members may be young, but this new generation of VCs is hungry and eager to change the venture capital industry. As more people from Gen Z enter the workforce in the next couple of years, they may see a vastly different industry, in which the more traditional path is all but obliterated. And it is starting now, as Loyst points out.
“A year ago, I wasn’t what people would typically think of when they picture a traditional VC,” she says. “I’m 24, the youngest on my team, a woman, didn’t go to an Ivy League school, no investment banking or start-up experience, and got my job from a cold email since I had no network in VC. But this is becoming the norm, and I think my story gives people hope that they can do it too.”