"Millennial" entrepreneurs are concerned about the effect they have on wider society as well as making money, a study by HSBC Private Bank says, with implications for how wealth managers should approach this population cohort.

A survey of 2,834 entrepreneurs in nine countries shows that persons aged below 35 are particularly concerned about having a positive impact on wider society than just focusing on their profits, a finding that suggests philanthropy and impact investing will remain important behaviours.

The study, conducted by HSBC Private Bank, entitled the Essence of Enterprise Report, delves into the opinions, fears and hopes of business leaders by age group, gender, nationality and type. Entrepreneurs in the survey are defined as major shareholders in privately-held institutions. They included sole traders, owner managers, shareholders and executives in family businesses, equity partners in partnership firms, and strategic investors. Firms surveyed included publicly listed and unlisted entities. The survey covered respondents from nine countries, with an average wealth per head of $4.6 million.

“In the same way millennial entrepreneurs take a very hands-on approach to business, this is also reflected in their wealth management and philanthropy. The wealth management industry will need to shift its mindset to a more entrepreneurial one, and adapt to serve the corporate as well as the personal needs of business-owning clients,” said Nick Levitt, head of global solutions group at HSBC Private Bank. 

The survey is designed to shed light on what kind of views and objectives business creators have, which can help guide private bankers about current and future service offerings, such as provision of corporate advice, philanthropy services and wealth transfer. There are an estimated 400 million entrepreneurs around the world, meaning that one in every 19 persons on the planet fits that description.

Millennials account for 35 per cent of the total respondents; those aged 35-54 account for 44 per cent, and those of 55 and over for 26 per cent. Some 65 per cent of all respondents are men. Countries in the survey are Hong Kong, Singapore, mainland China, United Arab Emirates, Saudi Arabia, the UK, France, Germany and the US.

The study identifies four types of entrepreneurs: “game changers”, “pathfinders”, “trailblazers” and “lifestylers”. Pathfinders, accounting for 40 per cent of the total, are defined as being “steady builders of businesses”. Game changers (18 per cent) are said to be most likely to be serial entrepreneurs and grow larger companies. Trailblazers are “passionate about what they do and see entrepreneurship as a way to improve themselves”; lifestylers often seek business to ensure their family’s needs are met.

Among the findings was that millennial entrepreneurs (35 or younger) are running firms with turnover which is 141 per cent greater than at businesses run by older persons ($11.5 million versus $4.8 million). 

The millennial cohort are concerned about the impact on the community – some 66 per cent of them say having a “positive economic impact” was a factor in going into business, and 59 per cent said they wanted to have a “positive impact in their community”. The younger cohort also seem to show more equality by gender: 47 per cent of them are women, while only 26 per cent of over-55s are women. 

The highest proportions of millennial entrepreneurs are in the Middle East (63 per cent), mainland China (44 per cent), and Hong Kong (44 per cent). 

On average, millennials’ main venture employs more than twice as many staff as those of their counterparts over 35 (123 versus 58 employees). They also have active shareholdings in five businesses, compared to just three for those aged over 35, HSBC Private Bank said.

Among successful young entrepreneurs, 89 per cent were actively involved in philanthropy last year

“The new generation of millennial entrepreneurs are revolutionising the nature of entrepreneurship. They are starting in business younger than previous generations and are involved in a greater number of enterprises,” Levitt said. 

There is a blurring of lines between social and business objectives. Some 79 per cent of millennial entrepreneurs are actively involved in philanthropic activities and this number rises to 89 per cent among the most successful young entrepreneurs, which is higher than for other age groups. (The reference “successful young entrepreneurs” has been defined as those under the age of 35 who have a business turnover of over $11.5 million.)

In addition, they are keen to apply their expertise from the business world to generate maximum impact. Half (50 per cent) of millennial entrepreneurs say there is a clear strategy behind their giving and 44 per cent say their giving reflects social and cultural, rather than personal, values. The most successful young entrepreneurs are also significantly more likely to give through investments with clearly defined social impact objectives.

In the family
Some two-thirds (67 per cent) of younger entrepreneurs come from a business-owning family, demonstrating the importance this background can play in early business success. Among the most successful entrepreneurs, that proportion is even higher (80 per cent).

When asked about the point at which they started to see themselves as entrepreneurs, 44 per cent of millennial entrepreneurs with a family business background identified their formal education or said they had always thought of themselves as an entrepreneur, compared to 33 per cent of those without this background.