But how can we help them make good on their ambitions?
Young and old people have different opinions and tastes on everything from fashion to politics. That might sound truistic, but it really matters if we’re trying to work out what the future might look like when today’s 20-somethings are running our major institutions. This is especially true when looking at the entrepreneurs and innovators who will have an outsized impact on how we live and work.
So, we at The Enterpreneurs Network teamed up with Youth Business International to ask a simple question: What do young entrepreneurs think? How are they different from older entrepreneurs? And what can we do to best support them?
“Their business’s primary aim is to solve a social or environmental problem”
Our main finding is that young entrepreneurs, here defined as those under 35, are more altruistic than older entrepreneurs. They are twice as likely (39% vs 18%) to say that their business’s primary aim is to solve a social or environmental problem. Interestingly, that figure actually rises to 47% for the most successful entrepreneurs (founders of businesses with a turnover of over £1m).
It is unclear whether this is because young people of every generation are genuinely more altruistic, and that altruism is something they grow out of, or if this generation is actually more generous-hearted than its predecessors. I suspect both are true. Evidence suggests that adolescents are more sensitive to social pressure than children or adults and, perhaps, that young entrepreneurs in their early 20s will be less agreeable and more antisocial when they are older. But it is also clearly true that as today’s young people have aged, we have seen a rise in pro-social business practices and an increasing focus on ESG metrics and B-Corp accreditation.
Some theorists suggest that people in wealthier countries hold more universalist ideas and that as your society becomes richer, the people expand their moral circles to include people outside of their country, animals and the broader environment. If this is true, then it makes sense that young people are more altruistic. The past was a much poorer country, after all. GDP per capitain the year 2000 was about 10 times higher than it was in the 1970s. Meaning that young people today were born into a world much wealthier than the world of their parents’ – to put it in some context, the difference between then and now is similar to the gap between the UK and Cambodia today.
If there is a concern about this outpouring of entrepreneurial altruism, it’s that it can seem unfocused. Entrepreneurs who say that the primary purpose of their business is to solve a social or environmental problem (29%) are also more likely to say they choose suppliers that are good for society even if their business suffers (60% vs 37%), and that they focus on promoting diversity at the expense of their business (55% vs 23%), and that they have an important role to make sure their employees have well-rounded lives, even if their work suffers (41% vs 23%).
Socially conscious businesses attract impact investors, altruistic staff and socially conscious customers, and they may be stuck having to fulfil the wants of their myriad stakeholders, losing sight of their initial vision. If a business is focusing on a major global challenge, like trying to create nuclear cold fusion or finding a cure to diabetes, it should be laser-focused on that aim.
So what can we do to support young entrepreneurs and help them tackle big global issues? In our report we suggest three main policy interventions.
The first is embracing tried-and-tested ways to help people, of all ages, start and scale businesses. They need access to good networks so they can find people to mentor them, collaborate with, and just so they know the ins and outs of running a business. The second is that we should bring back the Enterprise Allowance Scheme, which my co-author, Sam Dumitriu, has written about before.
The third recommendation is what I think is most relevant to the question about enabling young entrepreneurs to solve big problems. Many of the issues that the world faces have solutions that are difficult to profit from. Say you found a safe way to remove all the excess carbon dioxide from the air, you could reverse much of the damage of climate change and make the world happier and healthier. And while this would make you very popular, it is not clear that you would have paying customers. That makes it difficult to attract the initial investment that you need to do research or build a factory.
Governments often solve these problems for us. They build roads and provide healthcare to people who can’t afford it. If a safe form of carbon capture were invented, governments might choose to pay to use it. But that is far from certain. Governments might simply steal the technology or hope that some other government pays instead – all of which deters investment.
One way around this problem is for governments to credibly commit to buying these technologies if they are created or award Challenge Prizes for their invention. The UK government did this with the Covid-19 vaccine and NASA did something similar to find ways of supplying the international space station.
The advantage of Challenge Prizes is that they are solution-blind. Unlike Innovate UK grants, the Government wouldn’t need to evaluate proposals for blue-sky research and decide what seems like a plausible solution. Instead, we empower entrepreneurs to come up with ideas and then find backers in the private market who believe in their proposal. It’s win-win for taxpayers too because the Government only needs to pay-out if a novel solution really is found.
Today’s young people are the healthiest, best educated and, apparently, most altruistic generation on record. Throughout the world there are bright young minds thinking up clever solutions to the problems we see around us – our role, as policymakers, is to give them the tools they need to deliver.
Originally published by capex.co and reprinted here with permission.
