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Pioneering Gen Z Entrepreneurs: Reflections and Policy Considerations
Introduction: Generation Z Shaping the Green and Digital Transition
Entrepreneurial landscapes evolve with each generation. We are thus witnessing a significant shift today that is shaped by the emerging Generation Z (or Gen Z) workforce. Their ascent into the entrepreneurial sphere heralds a potential revolution in the way businesses operate. Understanding and integrating their unique values and approaches toward the green and digital transitions is therefore of critical importance. As the generations that will bear the brunt of the challenges posted by climate change, Generation Z and Millennials are also the generations most actively addressing environmental issues (Pew, 2021).
Gen Z entrepreneurs stand at the vanguard of sustainable change and are set to redefine economic and entrepreneurial growth patterns. However, the path ahead for Gen Z is strewn with personal and professional challenges. Much has been said about this generation’s focus on work-life balance and mental health. Policy changes are thus needed to foster environments that encourage positive mental health while also being sensitive to the vulnerabilities often experienced by members of Gen Z, such as climate anxiety and the pressure of digital connectivity.
Educational approaches must also be transformed to accommodate the hands-on, dynamic learning styles preferred by Gen Z. By integrating entrepreneurship education early on, and focusing on action-oriented, problem-solving curricula, we can nurture a generation of innovative leaders. This shift toward practical, technology-infused learning environments is critical to unlocking the entrepreneurial potential within each young person. The broader entrepreneurial ecosystem must also evolve to be genuinely inclusive, with all stakeholders striving to close the persistent gender gap and foster an environment in which founders with diverse backgrounds can flourish. To achieve this, it will be necessary to encourage intergenerational dialogue. Moreover, research initiatives in this area must actively engage Gen Z voices, ensuring that the entrepreneurial frameworks of the future are crafted not only for them, but with them. As we look to this generation of entrepreneurs to catalyze societal and environmental transformation, it is essential to listen, understand and act on their aspirations and concerns as we chart new paths toward a more sustainable and equitable future.
Entrepreneurs change the way we think, work and live. Around the globe, inspiring young people are building successful companies around ideas that are driven by their ambitions and enabled by their entrepreneurial skills and values. Generation Z – referring to people born after 1997 – is reshaping our economies with its distinctive approaches to work and entrepreneurship. The members of this generation tend to value collaborative and flexible work, and strive to integrate a focus on sustainability into their working lives. For this reason, youth entrepreneurship is an exciting area, as it attracts ambitious young people who want to change the world by engaging in business activities.
As a means of better understanding how to help this generation live up to its potential, this policy paper seeks to identify key drivers and barriers affecting young entrepreneurs committed to sustainability and innovation. To do so, it uses a focused case study centered on the fellows of the Sigma Squared Society, a network of founders under 26 years of age with over 800 members globally. The paper is informed by a quantitative survey of the Society’s members and supplemented with in-depth interviews of six fellows, selected on the basis of their active engagement in innovative sustainable ventures.
One issue of significant concern to these young businesspeople was “regulatory anxiety,” a term used to describe the apprehension felt by young founders as they confront complex legal frameworks. Young founders do not perceive the government as an enabler, but rather as a constraint to successful entrepreneurship. Hence, simplifying and reducing bureaucratic burdens by digitalizing application processes should be a top priority for public policymakers. Founders under 18 face unique barriers that make it difficult for the youngest entrepreneurs to start businesses. Policymakers can also improve the environment for ambitious young people by providing better access to grants and loans, assisting them in protecting their innovations through copyrights and patents, offering programs that support early entrepreneurial activities in particular, and providing better practical implementation guidance. Most important is practical, hands-on assistance, ideally from other young people who have already succeeded: Gen Z wants to learn from itself through learning by doing.
The highly successful Gen Z entrepreneurs showcased in this study exhibit the kind of resilience and optimism that epitomizes a positive psychology mindset. If fostered widely, this could significantly benefit entrepreneurial culture. Young founders have no trouble revealing their vulnerabilities to colleagues; they pay close attention to their own mental health and consciously practice optimism even in the face of failure. Encouraging and empowering the next generation of sustainable entrepreneurs should be in everyone’s interest.
Modern entrepreneurship policies have advanced significantly from the foundational small business practices of the 1960s and 1970s, adapting to technological advancements and shifting market dynamics (Bennett, 2014; Gilbert et al., 2004). Yet each generation reshapes business and entrepreneurship practices with distinct values and innovations. Drawing on current literature and our research, Table 1 delineates the contrasts between traditional entrepreneurship and the Gen Z-adapted approach, and guides our policy recommendations.
Our research highlights a shifting perspective and shows that new strategies are required to meet the needs and characteristics of this new generation of entrepreneurs. Historically, the traditional model emphasized stability and was focused on conventional small businesses and corresponding management education. In contrast, the Gen Z-adapted model embraces a more dynamic, purpose-driven approach that prioritizes sustainability, experiential learning, mental well-being and inclusivity, all within an agile regulatory and financial framework that caters to the distinct nature of Gen Z-led startups.
Our research underscores the importance of understanding the needs of Gen Z entrepreneurs in order to provide an environment that motivates and facilitates young people to engage in (sustainable) entrepreneurship and make a social contribution. In this context, governments and the support organizations from the entrepreneurship ecosystem should collaborate closely with Gen Z entrepreneurs to co-create policies that foster an environment conducive to their entrepreneurial aspirations.
- Sustainability, business models and financing
- Cultivating entrepreneurial ecosystems, support systems and role models
- Regulatory simplification, easing company creation and IPR awareness
- Mental well-being, positive psychology and resilience
- Entrepreneurial teaching and learning
- Gender inclusivity in entrepreneurship and intergenerational dialogue
- Further research on Gen Z
Deeply invested in social and environmental causes, Gen Z entrepreneurs are driven more by the “purpose” of a venture than mere financial gain. They demonstrate a commitment to such causes that underpin their approach to sustainable entrepreneurship. And what they mean when they say they want to have “skin in the game” in defining the future. At the same time, because customers often do not value sustainability aspects as much as other added values, young entrepreneurs face a dilemma in developing and implementing sustainable business models. The authentic mindset held by Gen Z entrepreneurs is critical to driving the green transformation forward and solving the problems we face in today’s global landscape. However, access to capital proves to be a challenge when balancing a profitable business model with the goal of contributing to a social or environmental cause. The introduction of financial support allocated specifically for young founders and startups with a sustainable focus (e.g., young entrepreneurship funds, VC with a focus on Gen Z and sustainability) would facilitate the emergence of further green and young startups. Additionally, simplifying and digitalizing the application processes for funding would reduce some of the most central hurdles facing young founders. At the same time, it is important to ensure that these funding models do not disproportionally restrict the autonomy of young founders.
Policy recommendation: Foster smart capital that supports sustainable entrepreneurship
While Gen Z’s commitment to sustainability is commendable, integrating these values into their business models presents challenges. Policies should focus on heightening awareness around the economic and societal value of sustainable practices. To propel young entrepre-neurs forward, policies offering easier access to financial capital, especially for sustainable businesses, should be discussed, developed and implemented.
Gen Z entrepreneurs face the same challenges as entrepreneurs from other generations but have to over-come additional hurdles and fears related to their youth and their lack of entrepreneurial knowledge, competencies, experience and industry insights. This highlights the importance of Gen Z-related support programs like incubators, networks and mentorship programs that are designed to facilitate their business ideas and support the implementation of their businesses. Communities focusing on young entre-preneurs such as the Sigma Squared Society are key support networks. Moreover, highlighting role models within the young entrepreneurs community could support peer-to-peer learning and introducing new media formats could positively influence the image of entrepreneurship.
Policy recommendation: Create the foundations for entrepreneurial success
Policies and initiatives should underline the importance of co-working spaces, incubators and mentorship programs that cater specifically to the needs of young entrepreneurs and support the business areas that they are working in. EU and national policies should prioritize creating networks and platforms that offer mentorship, climate education and exposure to role models who can guide and inspire.
Regulation and bureaucracy are not inherently negative; rather they are essential components of an innovation-driven economy that require careful calibration. Understanding and navigating the legal and regulatory landscape can be challenging for young entrepreneurs. Although Gen Zers are not alone in grappling with overwhelming bureaucratic processes and barriers to establishing and running a business, young entrepreneurs under the age of 18 in particular face an additional hurdle. These factors collectively complicate the lives of young entrepreneurs, creating a fear of bureaucracy and consuming a significant amount of time that could otherwise be allocated to idea development and testing. Establishing online processes with digital forms could mark a first step in simplifying procedures for young entrepreneurs. Setting up communication channels that are used by these entrepreneurs could mark a second step. Although initiatives to ease the bureaucracy have been introduced, they need to be adapted to Gen Z’s needs of being digital, easy to understand and easy to operate.
Policy recommendation: Support the youngest entrepreneurs and IPR education
To support young entrepreneurs, policies should address the bureaucratic and legal hurdles faced by those under 18 wishing to establish a company and empower a community’s youngest innovators to transform their ideas into viable businesses. It is essential to improve awareness and offer resources that educate individuals on protecting their innovations through means such as patents, copyrights and trademarks.
The growing rates of reported depression among Gen Zers and Millennials underscore the importance of mental well-being. The interviewed founders clearly showed their application of positive psychology methods in both their daily lives and businesses. In addition to demonstrating a positive mindset, they exhibited a high degree of resilience and strong self-reflection skills. Moreover, all interviewees emphasized the importance of practicing mindfulness and protecting their mental health. These founders had no trouble expressing their fears and showing vulnerability. Educating entrepreneurs on these topics and promoting positive role models is of utmost importance for a generation struggling with well-being and mental health. Gen Z could benefit greatly from learning from inspiring role models who have overcome obstacles, experienced fear and ultimately maintained trust in their future. This positive outlook serves as their driving force that is anchored in a broader mission. Having such role models who have successfully navigated the challenges of starting a business can provide inspiration and courage to young people contemplating entrepreneurship.
Policy recommendation: Embrace empathy to build resilience
Principles of positive psychology should be incorporated into established EU policies targeting entrepreneurship. Principles such as resilience and a growth mindset can enhance the preparedness of young entrepreneurs in addressing global challenges like climate change and economic volatility. In addition to introducing appropriate programs aimed at helping young entrepreneurs navigate potential setbacks and learn to pivot effectively, the communication of such programs, including procedures and applications for support programs, should be thoroughly examined through a positive psychology lens to ensure a focus on strengths and fostering a positive mindset.
Gen Z favors a dynamic and hands-on learning style, often emphasizing quick and practical experiences. To meet this demand, we need to integrate entrepreneurial education into school curricula and thereby nurture an innovative and proactive entrepreneurial mindset from an early age. Furthermore, given Gen Zers’ affinity for collaborative online engagement as well their familiarity with AI tools, educational policies and practices must undergo digital transformation to align with their learning preferences.
Policy recommendation: Early entrepreneurial education and competence development
Policies should incorporate entrepreneurial topics into early education, thereby cultivating a mindset focused on innovation and proactive problem-solving. Furthermore, policies should promote the development of both practical, hands-on skills and structured entrepreneurship lessons.
Young entrepreneurs reliant on digital communication platforms often hold divergent life views and goals, which can lead to misunderstanding and intergenerational conflicts. Addressing these conflicts is essential to harmonious collaboration. As one founder mentioned, their company gained valuable insights from experienced colleagues who work alongside them, contributing their experience, skills and knowledge. this mutual collaboration allowed both generations to learn from each other.
Policy recommendation: Go all-in on Gen Z entrepreneurship!
Policy support should underline the importance of closing the gender gap. Policymaking must prioritize Gen Z entrepreneurship and focus particularly on elevating female founders, thereby addressing the entrepreneurial gender gap. Policymakers should create platforms that foster intergenerational dialogues and greater inclusivity in entrepreneurship.
In order to do a better job of helping Gen Z leverage the drivers of their entrepreneurship and navigate the obstacles to establishing and running a business, we need to know more about their behavior and needs. Addressing this will involve including young entrepreneurs in every step of the policy development process.
Policy recommendation: Mind the gap – a call for informed action
Governments should support further research on Gen Z entrepreneurship in order to better understand their needs and drivers as well as the barriers they face.