What venture funds are looking for in Gen Z startups - and what they are afraid of

One of the notable changes in the venture industry over the past five years has been the emergence of a new generation of founders. Young Gen Z entrepreneurs aren't just young faces on pitches. These are teams with new priorities, communication style, and attitude to business as a social, not just economic structure. They're already in the game - and it's a new reality.

But foundations are scared. How do you interact with someone who doesn't read the business press but instantly launches a TikTok campaign and gathers thousands of leads a night?

In this article, we take a real look at why some startups are exciting for funds and others are alarming. How pitching changes, what investors should retrain. We'll figure out exactly what they bring to the market - and what to do about it.

New optics: how Gen Z perceives business

Generation Z is those born after 1997. Today they are from 20 to 28. They haven't found a life without the internet, don't believe in the career ladder, don't expect stability, and have never seen it. According to the research platform Morning Consult, 53% of Gen Z are already freelancing or running their projects. More than a third of those surveyed (36%) say they would rather start their own business than work for hire.

This generation doesn't do "startup for startup". For them, business is a space for practical action. Create a project because nobody solves the problem in their neighborhood.

The EY Future Consumer Index study shows that 63% of Gen Z expect social position and transparency from brands. This is directly reflected in their business: they build companies that not only sell, but also talk with the market, users, and society.

Real case: Glisten AI

The Glisten AI startup - an AI-based learning tool generation service - was founded by Yale student Lucas Lane in 2023. He was 21 and had already completed two accelerators (Antler and TinySeed). The Glisten team collected 2,000 active users in 4 months, without a marketing budget. Their presentation to investors consisted of Loom videos and screencasts in Notion.

They got $500k pre-seed from Lower Hippeau and Hustle Fund, and by summer 2024 they were out on MRR at $30k. Investors noted: the founders did not try to "sell" through the numbers - they simply showed how they simplified the routine for real teams. It worked.

How pitching has changed: Now it's a story, not a model

A typical Gen Z pitch isn't 15 PowerPoint slides with linear logic. It's a set of tools, memes, community links, and real-time indicators. Instead of long introductions, API documentation. Instead of postponed forecasts, there is a Discord server with 5,000 subscribers who help set off the product.

They don't focus on turnover because they know how to organically get to early traction. Investors see it. According to Julia Howson, Lightspeed Venture Partners:

"We don't need a perfect business plan - we need a team that has the nerve and a real response from the market. Gen Z has it more often than not."

What funds see in Gen Z startups

Moonhub, a startup for AI recruiting, was founded in 2022 by Stanford graduate Nishita Shetty. She was 24. In its first year, the team conducted more than 10,000 AI interviews, received feedback from HR departments at Amazon, Netflix, and Stripe, and closed a seed round of $10 million from Khosla Ventures.

Shetty did not build a "loud brand",  but she made each demo session as product-centric as possible. Investors noted: she did not have a "background in business", but there was a lively response from clients. It's more fun than cases from previous jobs.

One of Gen Z's most valuable skills is the ability to quickly change strategy. They don't hold onto the hypothesis unless it works. They don't have long to explain why pivot. They read metrics, do AMA sessions with users, and test new features over the weekend.

But if the fund will require 40-strange presentations and quarterly reporting, the team can just go to another investor. Or even choose a bootstrap and no-code, so as not to be rejected by anyone.

The good funds understand that. They change the format of communication, shorten the cycle of making decisions, go to the pre-seed stage, and build trust not through the boards of directors, but through Telegram chats and quick calls.

What does it mean for the market?

New teams create products faster. They don't ask for permission - they test. They don't copy Western models, they do theirs. They make business out of the pain they experienced.

And they have something that doesn't measure up to the table: Passion and energy. They believe in what they do. That belief is the fuel that can turn the market around.

Gen Z looks at the market as a flexible system, not a pyramid scheme. They're not about hierarchy - they're about ecosystems. Not about control - about joint creation.

If they don't need a fund tomorrow, they'll go the other way. But if the fund gives not only money, but also the opportunity to develop, it will be a partnership.