96% of Gen Z entrepreneurs would turn down cash from a prospective investor based on moral and ethical objections, according to a new study.

New research commissioned by Connectd, a growth marketplace connecting startups with investors and advisors, highlights the importance of ESG credentials to new business leaders.

The study, conducted by Censuswide, polled 50 Gen Z entrepreneurs (aged 18-24) and 50 entrepreneurs aged 25 and over to discover the changing priorities between each group.

“This study demonstrated the shift in focus for the new wave of entrepreneurs, who are increasingly prioritising ethical and societal purpose when choosing their partners,” said Roei Samuel, serial entrepreneur, investor and CEO of Connectd.

“This can only be a good thing for future business leaders, ensuring that ESG is at the forefront of company growth from now on.”

While funding remains the number one benefit investors bring, the study found that 80% of Gen Z investors value their network and connections, which drops to 63% for those aged 25 and over.

More than half (58%) of Gen Z entrepreneurs consider an investor’s green credentials when deciding who to partner with.

Samuel added: “Investors must be mindful that their ESG credentials are under the spotlight like never before. They can make it a real point of differentiation when partnering with new businesses.”

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The research also found marked differences in how entrepreneurs across the generational divide are searching for investment. The vast majority (82%) of Gen Z entrepreneurs are using online platforms to find potential funding, compared to just 65% of older founders, who tend to use more traditional routes such as friends, family and legacy networks. 

Latika Vij, head of investor relations at Connectd, added: “The drive and dynamism of entrepreneurs doesn’t change across generations, but clearly there is an ethical and societal shift taking place. This puts extra onus on startup investors to put ESG initiatives at the heart of their strategy to attract new startups to their portfolios.”

The study also found a generational gap in the use of social media, with 72% of Gen Z founders using sources like Linkedin to seek investors and only 60% of founders aged over 25 doing the same.