Siddharth Thakur, then a high school student, didn't know what a startup was when he started developing an idea for what would become Paradigm Robotics, a company he founded to help firefighters do their jobs. He lacked knowledge about venture capital and pitch decks, and had no idea about scale.
Now a 19-year-old junior at the University of Texas at Austin, Thakur reflects on the company's growth. “At first it was just a passion project,” he says. “I was just building an engineering project to solve a problem for this local fire department.”
As a freshman in high school, he happened upon a local news story about a firefighter killed in a building fire. Digging deeper, we found that approximately 350,000 structure fires occur in the United States each year, resulting in nearly 3,000 deaths and nearly $9 billion in property loss. After consultations with local fire chiefs, and about 100 similar consultations with departments across the country, he believes that fire departments deploy to structure fires to assess damage, search for survivors, and assist firefighters. We saw an opportunity to build a remotely operated robot that could minimize the risk to
In many ways, Thakur's company epitomizes the entrepreneurial spirit of Gen Z, with its socially conscious and human-centered mission. If millennial founders are defined by founders like Mark Zuckerberg, Evan Spiegel, and Kevin Systrom, who ushered in the social media age, Gen Z Defined by the metaphor of doing well: building a company that solves problems. Solving today's social ills through innovation.
Generation Z, ages 11 to 26, are characterized as more politically aware and social justice-minded than previous generations. Her Generation Z, the first generation born without knowing a pre-Internet era, came of age amid unprecedented levels of globalization, information flow, and human diversity.
According to research from Stanford University's Center for Advanced Study in the Behavioral Sciences, the typical Gen Zer is highly self-motivated, “cares deeply about others, strives for a diverse community, and is highly collaborative and outgoing. Flexible, relatable, authentic and non-hierarchical in leadership, disheartened by genetic problems like climate change, but about the work that must be done to address them. have a pragmatic attitude,” wrote senior researcher Roberta Katz.
According to some metrics, Gen Z is also highly entrepreneurial. According to a study by Morning Consult and Samsung, approximately 50% of Gen Z are interested in starting their own business.
“Gen Z founders often succeed because of their speed. They grew up in the mobile internet era and are used to innovation at breakneck speed,” says lead investor at venture capital fund Northzone. Molly Alter says. luck on mail. “This focus on speed of execution allows us to iterate quickly and build dynamic products that leverage the latest technology capabilities.”
Generating problem solvers
Jonathan Gleechan works with about 350 Gen Z-run startups at the Founder Institute, a 14-year-old incubator that helps pre-seed entrepreneurs gain traction and funding. Gleechan said Gen Z founders make up just 5% of the companies in the institute's portfolio, but he's bullish about what they can accomplish.
“They emerged with a much greater advantage than previous generations in being able to connect with customers and tell great stories about the brand,” he says.
Unlike previous generations, the Gen Z founders in our portfolio inherently understand the importance of having a company with a purpose.
“I don't know if that makes them socially responsible, but they just care about sustainability and equity,” he says. “[They’re] They are challenging what is accepted in the world and what they think is incorrect. ”
For example, SoundMind, an audio wellness platform founded by Gen Z, provides users with music therapy to deal with stress, anxiety, and trauma. Brian Feminella, 23, founded the company with Travis Chen, 24, after serving in the military and seeing the impact his military service had on the mental health of his fellow soldiers. . Earlier this year, SoundMind raised more than $2 million in seed money and has hired about 100,000 users in about 50 organizations, including schools and nonprofits.
Next, UK-based Tash Grossman, 26, co-founded Slip, a digital receipt software company aimed at minimizing waste. The idea came to me in 2020 when I couldn't return pants to a major retailer because I didn't have a paper receipt.
“Why are we still using paper receipts in 2020?” she recalled.
Through her research, she learned that approximately 11.2 billion receipts are issued each year in the UK and that the paper they are printed on cannot be recycled. Gosman left her management consulting job in 2020 and launched Slip earlier this year. Grossman said the platform hosts about 30,000 receipts each month and is integrated into her retailer's POS system.
So far, Slip, which has seven retail customers, has raised $1 million in pre-seed funding and plans to close its seed round soon, Grossman said.
Gen Z also expresses greater concern about climate change than their peers and have pursued careers dedicated to environmental conservation. According to Deloitte, 64% of Gen Z believe they will pay more for sustainable products and increasingly expect companies to invest in sustainability.
Megan Royst, 26-year-old founder of Gen Z VC, said: “The class of climate entrepreneurs is growing because the climate crisis is urgent and the number one source of anxiety for our generation.” says. A member community for young investors and creators. Her internal research among young investors found that AI, climate change, and fintech are among the industries Gen Z flocks to the most.
Perhaps the most prominent Gen Z founder is Alexander Wang (not to be confused with Millennial fashion designer Alexander Wang), who became the youngest self-made billionaire in 2021 at the age of 24. Five years ago, he was just one year into his era. As a student at MIT, Wang co-founded Scale AI, a software company that tags text, images, and videos to help companies improve the data used to train his AI algorithms.
Although he has been a vocal advocate of the use of AI, he also expressed caution about the geopolitical implications of AI, testifying before Congress in July about the need to develop AI policy and development regulations.
Gen Z in VC
It’s still early days for Gen Z founders. Although they are expected to make up 27% of the global workforce by 2025, according to the World Economic Forum, the youngest Gen Zers are still in elementary school and too young to apply for an LLC.
And despite the extraordinary success of founders like Mr. Wang and his millennial, Gen Research shows that the average age of successful startup founders is 45.
For the maturing generation of Gen Z, universities are increasingly creating environments where young founders can experiment. Thakur has operated Paradigm his robotics entirely on his own, relying on the incubator and resources of his campus at the University of Texas at Austin, rather than outside investment. The company plans to raise its first funding round in the first quarter of 2024.
For the past six months, he has been seeking advice from investors to better understand VC in preparation for his pre-seed round. But given his position as a university student, he says that was difficult.
“Out of every 10 investors, three will say they need to exit. But the other seven will say, 'Look, how successful we've been so far.'” What does it mean to drop out? “I don’t have it,” he says.
That was the formula 20 years ago, says Ali Rybarikian, a senior partner at McKinsey. He is the global leader of the company's Leap practice, helping companies discover the value of their startups. Previously, young founders would almost always develop their ideas in the digital space, attract the attention of venture capitalists, and then drop out of college to scale their companies. That's not the model anymore, but that doesn't mean there aren't Gen Z founders dropping out of college.
But Jeffrey Saul, director of the Center for Venture Research at the University of New Hampshire, says the incentive to drop out of college and go into venture capital is no longer as strong. The campus not only provides founders with free space, but also the opportunity to network with alumni, professors, and colleagues, and gain cheap labor from other students eager to join their startups.
Still, Molly Fowler, CEO of the student-led VC Dorm Room Fund, said students are more motivated to drop out once their company takes off, and universities are moving from business idea to VC. It added that it provides maximum benefits at the investment stage. According to the National Center for Science and Technology Statistics, university research and development spending in 2021 reached $90 billion, the highest ever.
“Now is a great time to invest in students. Meanwhile, my colleagues who don't specialize in students complained to me last year about a drop in deal flow and said, 'Great founders are thriving. Is that so?” he asked. That’s not the case with me at all,” Fowler said.
It's at places like Blackstone's LaunchPad at the University of Texas at Austin, one of 64 across the country, that students like Thakur are finding help. Nina Ho, director of LaunchPad's Austin Campus, sees about 4,500 students come through the hub each year seeking mentorship, speakers and events, community, grants and other funding. Masu.
While the most prominent Millennial founders achieved financial success in their early to mid-20s, that trend appears to be fading, with Gen Z founders increasingly becoming investors, especially if they don't have a clear business. find it more difficult to be taken seriously. That's the proposal, Grossman says. In other words, focusing only on objectives won't work. Slips started as a consumer problem and quickly surfaced as a sustainability nightmare. However, she struggled to identify a core consumer and benefit scheme in her early stages and eventually settled on a business-to-business-to-consumer model that attracted some investors.
“It's great to work on sustainability internally,” Grossman said. “But if there's no one to pay for it, who cares?”
Grossman admits there's a lot he doesn't know, and finding smart, passionate people to help grow the company will be a challenge. But considering his age, Grossman says he is sometimes shocked by what he has accomplished.
“There are a lot of disadvantages to becoming a founder at this age, so it's like giving up on your 20s,” she says. “While your friends work to live, you live to work…”[But] I have never felt like my age was an obstacle in my business. ”