It’s perhaps no surprise that Gen-Z—who are getting fired at disproportionate rates and are often the subject of workplace ire—has an entrepreneurial streak. Still, the generation’s fervor is impressive. According to a 2023 report by commerce platform Square, more than half of Gen-Zers consider starting a business. A 2024 Justworks study places that number even higher, finding that 71 percent of young employed adults are interested in becoming founders.

There are two fundamental ways to start a company, says Kevin Novak, founder and managing partner of early stage AI investor Rackhouse Venture Capital. You can either become the “world’s expert” in something, or you can spot a “wide open opportunity” by asking, “What is nobody an expert in?”

Young people—understandably—may lack that expertise, so the first option is likely out of reach. But Novak says Gen-Zers are uniquely positioned to disrupt sleepy industries and find new ways to solve problems. Here’s what he and other investors see as the best opportunities for Gen-Z entrepreneurs right now.

“Unsexy” industries like industrial manufacturing

Novak says that generative AI has created a “huge opportunity” for innovation in “dirty, dusty, unsexy” industries like compliance, logistics, industrial manufacturing, and construction operations.

Past waves of technological innovation have allowed startups to transform once-stagnant industries, he says. Uber, for example, forever changed ridesharing through its mobile app. But back-of-house industries couldn’t ride these waves, according to Novak—they “didn’t participate in mobile” and “didn’t participate in big data.”

“So as a builder,” he adds, “if I can figure out what is the problem holding you back from doing your job 10 times better, I effectively get the opportunity to harvest two decades worth of economic lag.”

Experiential industries

Alex Rosenthal, director at consumer investment firm Verlinvest, says he’s bullish on businesses “offering live social experiences.” His firm has already invested in several such companies, including go-kart racing franchise K1 Speed and bouldering gym operator the Climbing Hangar.

“The more that AI and social media become a part of people’s lives,” Rosenthal says, the more “they’re going to want to put their phones down and go out into the real world and do something that’s good for their well-being.” As digital natives, Gen-Zers have an especially “strong desire to feel community,” he says. And brands in social experience industries like fitness, health, wellness, education, and travel are especially well-positioned to meet this need.

Small-business services

Cardone Ventures co-founder and president Natalie Dawson says many of the small-business owners she meets with every day “have no idea” how to generate new leads or organize existing ones. That’s why she recommends that Gen-Zers create businesses that help other businesses grow.

Specifically, Dawson advises becoming the agency of choice for small-business owners in a specific vertical by providing them with one platform that blends several functions like marketing, sales, and bookkeeping. “AI is ripe to disrupt this,” she says, “and Gen-Z is ripe to … not have to go through traditional schooling and traditional education to get the skills required to really help business owners make more money.”

The creator economy

Entrepreneur and angel investor Sage Ke’alohilani Quiamno is eyeing Gen-Z creator economy startups. Young founders can more easily spot pain points in this space, she says, because “they’re experiencing the problem firsthand.” Gen-Zers have “grown up monetizing personal brands and social platforms”—or followed along as their favorite creators did so.

The generation intuitively understands “the nuances of audience, engagement, platform, algorithms, creative burnouts,” Quiamno says. This gives them a more accurate view of how to improve the industry than older media executives, she adds.

AI-enabled startups

In CentaurLab.AI founder and investor Boon Chew’s opinion, it’s not the industry Gen-Z founders choose that matters. It’s the tools they use. By using AI, Chew says, you can easily amplify the value you’ll create in a given sector. AI “cuts across so many things,” he says. “So when you add ‘AI-enabled’ or ‘AI-driven’ to whatever industry you go into, you can pretty much become a leader in that right away.”

Source