In an earlier installment of our tokenization blog series, we explained who the next generations of investors are and why they are so different from the generations that came before them. Here, we explore the expected behaviors of this next generation of investors (who we previously defined as digital and virtual natives) and what makes them tick.
Paradoxically, in this age of exponential technological growth, it is not the tech that drives next-gen behaviors—technology is a commodity that’s taken for granted. While the rest of us try to get our heads around this increasingly rapid and sometimes scary rate of tech change, the next generations don’t think about the technologies (which are just enablers after all), but instead they are bringing forth a cultural revolution.
Like babies swiping iPads before they can talk, the next generation intuitively uses digital spaces to meet friends or watch YouTube and turn to virtual worlds as places to connect with friends (akin to Gen Xers who met in town centers or malls and Millennials who met in coffee shops).
The next generations flock to the corners of these 3D, immersive, engaging and virtual worlds where they can discuss their passions and interests with those who share them—from gaming to K-pop—bonding with both people they know in real life and those they’ve only met online.
In these digital and virtual spaces (think Roblox, Fortnite and Population One), the next generation is forming new communities with real cultural values. They are known for working, shopping, dating and making friends online and they flit between worlds, sites, apps and social media feeds—each one forming a different part of their online identity. They are also constantly re-assessing their digital inputs and optimizing everything in real time to better suit their needs. Indeed, they expect companies to conform and cater to them in exchange for their data; they want content and rewards at scale. They also have ever higher expectations of personalized experiences.
This means companies (including investment firms) must speak their language to them directly and meet them where they are.
The next generation uses social media extensively and intuitively and increasingly relies on it (together with their peers and within their communities) for product discovery, reviews, recommendations, and purchases. “Likes” and “good comments” on social media play a crucial role in shaping their purchasing decisions, as do influencers, next-gen social networks and user-generated content (i.e., TikTok videos).
This cultural shift to communities and sharing has manifested in the growth of new economies. For instance, the sharing economy and the gig economy are based upon ever more digital and decentralized communities and sharing in general. This includes investments, where the next generations follow others and are followed by peers. This reliance on peers has coincided with diminished trust in institutions in general, especially those not active in their spaces.
It is important to note that perspectives are not all rosy with this cohort. The next generations’ consensus is that Boomers have robbed them. While they might not be well acquainted with inflation trends, money printing and unprecedented global government and private debt levels, they are well aware that, unlike their parents, they might never be able to buy a house or afford college. This may be partly why they value experiences over possessions.
To finish on a positive note, even though the next generation’s identity has been shaped by the digital age, climate anxiety, a shifting financial landscape and COVID-19, these cultural shifts have come together with the rise of enabling technologies such as AI, Artificial Reality, Virtual Reality, Spatial Computing, Bitcoin, Crypto and DeFi leading to the next generation of the internet: Web3. This cultural and technological phenomenon is being adopted faster than the internet was adopted, grew globally by a third last year and is all about individual and community ownership, control, and empowerment.
Now that we have introduced who the next gen of investors are and what makes them tick, check back for the next installment in this series in which we will explain what this generation of investors will buy and how they will do it.
Read our "Tokenization of Funds – Mapping a Way Forward" whitepaper to learn more about tokenization.
