As many societies around the world are ageing, the accompanying narrative is often posed as a negative or a problem to be solved. At 4Gen ventures, we believe that increased longevity is an macroeconomic theme that presents companies across all industries a broad horizon of new business opportunities. The challenge to be met is to both understand how consumers and their needs are evolving and to create products and services to meet that demand.
There are many promising companies being formed to solve the problems associated with an ageing society. 4Gen Ventures aims to invest in scalable Age-Tech businesses, typically to help them break into the £10M revenue/year range, on their path to greatness.
Many entrepreneurs we meet do not initially view themselves as having an Age-Tech angle. However, by the end of a discussion, the founder and I will often conclude that they may have a compelling opportunity in the 50-plus market. Once we start to explore the opportunity, thinking around a new strategy can quickly emerge.
One innovator I met recently is Sakeeb Zaman, CEO and Co-founder of StrideUp. StrideUp helps first-time home buyers who have enough of a down-payment to buy half a home but not for a whole home. Through a financing partner, StrideUp provides a mortgage for one half and a rental for the other half, until such time as the buyer can afford to convert to a mortgage-only model.
We started to brainstorm about the other end of the mortgage market, the Last Time Buyer. The same mechanism could allow someone who owns a home and wants to liquidate their asset without moving to move to a hybrid model. If they have already paid off their mortgage, they would sell half their home, and have a rental contract with the new owner of that ‘half-home’.
Perhaps even more far-fetched was my discussion with LaundryHeap’s Deyan Dimitrov. As you might expect from the name, these guys are experts in laundry, and their core customer base is 25-35-year-old males.
However, they are also increasingly serving the Airbnb market, many of whose hosts are empty nesters. As we started to talk about the 7.6M Britons involved in providing care to family members (often in their 50s and caring for parents in their 80s), the potential to reduce the ‘load’ of these people by outsourcing the laundry component became compelling. Even more creatively, one could imagine scenarios in which you eliminate the washer and dryer, helping to open up space for other uses.
If we pull the thread on Airbnb, we realize that much of their current growth is actually with seniors, initially as hosts but also, increasingly, as guests. In 2017 the Over 60s hosted 13.5% of the 100M Airbnb stays, and their share of hosting is rising faster than any other group. Although millennial guests dominated the first wave of Airbnb, seniors are also now the fastest-growing guest demographic.
This generational pattern can be observed in other technology platforms – seniors are now the fastest growing demographic in social media, smartphones, wearables and food-delivery, while millennials are blazing the trail in new spaces such as micro-mobility, new banks, shaving kits and so on.
In fact, we can start to see a pattern. The majority of B2C start-ups are ‘by Millennials, for Millennials’. Younger people are typically going to be more open to experimenting with new models. Successful start-ups typically harness a viral growth path that spreads peer-to-peer, so the first wave of growth will remain among Millennials. However, as a sector becomes more established, several things start to happen: the early adopters max out and some even defect as they start to look for the next platform, and those slower to adopt become comfortable using the service. Thus, we should expect a generational shift in many new services.
Armed with this insight, we would recommend that many companies that today are targeting Millennials, should start to think about the multi-generational angle. Older customers may require some hand-holding and perhaps different messaging and sales/marketing channels. Given that they often have substantial needs and are generally quite loyal the potential benefits are significant. The first company to gain their trust are likely retain their business for a long-time.
A shift in thinking in how start-ups view their future customer has the potential to deliver a new wave of business prospects. The Age-Tech opportunity is not about designing products and services for ‘Older People’ but pivoting on current strategy to consider the needs of a large group of consumers who may not previously have registered on your business radar.
Dominic Endicott, 4Gen Ventures