Why Millennials and Gen Z Are Skipping Stocks and Investing in Startups

Ask someone under 40 what they invest in, and chances are you'll hear answers that would've raised eyebrows a generation ago—startups, crypto, fractional real estate, maybe even wine or collectibles. Stocks and bonds? Sure, but not with the same confidence or priority their parents once had. For Millennials and Gen Z, the traditional investing playbook has been torn up and rewritten. They’re not just chasing returns—they're chasing meaning, autonomy, and the chance to get in early on something exciting. That mindset is reshaping how young people build wealth—and increasingly, that path runs straight through private markets.

Skeptical of Wall Street, Hungry for Something Different

Younger investors didn't grow up in the booming 1990s. Instead, their formative years were shaped by the 2008 financial crisis, the burden of student loans, and the turbulence of the pandemic. Trust in Wall Street has taken a hit—and so has belief in the idea that you can build real wealth by just throwing money into the S&P 500 and waiting.

According to a 2022 Bank of America study, a staggering 75% of Millennial and Gen Z investors believe that it's no longer possible to achieve above-average returns from traditional stocks and bonds alone. That's more than double the skepticism held by older generations. And they're acting on that belief. On average, younger investors allocate just 47% of their portfolios to stocks and bonds—compared to 75% for those over 44. The rest is going elsewhere: into crypto, real estate, commodities, and increasingly, early-stage startups.

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The Appeal of Startups

One of the biggest draws of startup investing is that it feels personal. Stocks are abstract. Startups, on the other hand, are scrappy and tangible. You can watch a founder pitch their vision, see exactly what they're building, and invest directly in that idea. You’re not just betting on a ticker symbol—you're backing someone's dream.

And let's be honest: part of the allure is the idea of getting in early. Everyone's heard the stories—if you had invested in Uber when it was still private, or Amazon in its garage-days, you'd be sitting on life-changing returns. Startup investing taps into that possibility. It's risky, yes. Most of these companies won't make it. But if one does, the upside can be enormous. And with platforms like StartEngine, Republic, and WeFunder making these deals accessible to anyone with a few hundred dollars, it suddenly doesn't feel like a game reserved for Silicon Valley insiders anymore.

From Public Markets to Private Missions

This isn't just about returns. It's about values. For younger investors, alignment matters. They want their portfolios to reflect who they are and what they care about. That's why more than half of Gen Z and Millennial investors say they'll only invest in companies that take a public stance on social or environmental issues. Over 80% say they're willing to accept lower returns if it means supporting businesses that align with their values. That's not just lip service—it's reshaping where capital flows.

Startups offer a direct line to that kind of impact. Whether it’s a climate tech company building better batteries, or a female-founded wellness brand promoting mental health access, younger investors see these opportunities as a way to do good while (hopefully) doing well.

Tech-Native Behavior, App-Native Investing

None of this would be possible without the platforms that made startup investing feel intuitive. This generation is investing on phones, not through stockbrokers. 65% of Gen Z investors use investing apps to manage their money—a much higher share than Gen X. They're browsing deals in the same way they scroll through social media. That accessibility—combined with education and hype from TikTok, YouTube, Reddit, and Instagram—creates an environment where startup investing doesn't feel fringe. It feels normal.

In fact, nearly half of Millennials and Gen Z say social media is their primary source of financial information. Compare that to just 6% of older generations, and the gap is clear. This isn't about CNBC anymore. It's about viral explainer videos, crowdsourced due diligence, and founders who pitch like influencers. Startup investing fits that world perfectly.

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The Decline of Stocks, the Rise of Everything Else

If you want a stat that sums this all up, here it is: in 2022, 73% of Gen Z said they owned stocks. By 2024, that number had fallen to just 41%. That's not a gentle shift—it's a pivot. Meanwhile, more than half of Gen Z investors now say their primary investments are in crypto. Roughly 14% of their portfolios are allocated to it, compared to just 1% for older generations.

They're also getting in earlier than any generation before them. Gen Z starts investing, on average, at age 19. They're 45% more likely than Millennials were to start by age 21. But they're not starting with index funds. They're starting with what they know—digital assets, mobile-first apps, and platforms that offer access to startups they can understand and believe in.

It's not unusual for a 22-year-old today to have a small stake in a pre-seed fintech company, a few hundred dollars in fractional real estate, and a handful of NFTs. To older generations, that might sound risky. To younger investors, it sounds normal.

This Isn't a Phase—It's a Redefinition of Investing

The platforms that power this shift—StartEngine, Republic, WeFunder, and others—aren't just fringe experiments. They're regulated, growing fast, and attracting major capital. In the private equity space alone, assets under management nearly doubled from 2015 to 2022, ballooning from $4.5 trillion to $9.8 trillion. Some of that is institutional money, but a growing share is retail investors who are done waiting for permission to build wealth the old way.

Startups are messy. They're risky. But they're also real. And for Millennials and Gen Z, that's the point.

Investing Isn't What It Used to Be—And That's a Good Thing

Traditional investing isn't dead. Stocks and bonds will always have a place in a well-balanced portfolio. But for younger generations, they're no longer the centerpiece. They’re background noise.

The main event is happening elsewhere—in private deals, high-conviction startups, values-driven companies, and platforms that speak their language. For Millennials and Gen Z, investing is no longer just about compound interest and dividend yields. It's about access. It's about impact. It's about choosing where your money goes and who it empowers.

And for the first time ever, the tools to do that aren't reserved for the rich. They're in your pocket, available to anyone, and ready to change what investing means—for good.

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