The Baby Boomer generation in the UK and United States has been creating enormous economic waves since it began in the late 1940s. Even today, the sheer number of Baby Boomers becoming pensioners has huge ramifications for all corners of the economy, even startups. We tend to think of startups as a young person’s game, but as we shall soon see, even these young and innovative companies are tethered to the money of old people.
Consumers have three main periods of life. When consumers are young (say in their 20s and 30s), they spend a lot of money. These consumers are starting families, buying cars and getting their first mortgages. All of this spending activity adds up. This money “feeds the machine” of the national economy and the more spenders there are the better.
As consumers get older, they start to spend less (we’re talking about the middle-aged in their 40s, 50s and early 60s). The kids are growing up, the house is all but paid for and because these are the prime earning years, these people tend to have most of the “stuff” they want. The money they have is put to work in investments. It’s these people who are funding the development of new businesses, hoping these little startups will grow into giants that will pay big investment returns.
When consumers enter retirement, these investment funds start to dry up. Risk and reward go hand-in-hand. Where a middle-aged consumer might risk a lot for the possibility of big returns, the old person doesn’t have time to recover from a financial crash. These elderly consumers put their available capital into low-risk investments like bonds and younger consumers have to work to pay for their pensions.
So what does this all mean? Well, we’ve been living for the past couple of decades in a world where a whole ton of people (the Boomers) are paying for startups to discover new ways to make them money. As the Boomers age into retirement, startup capital is going to get a lot more scarce.
Take Advantage of Cheap Capital While It’s Still Available
Say you’re a startup getting into the world of online gambling. Historically speaking, your startup capital costs are lower than most previous generations have seen and they’re also lower than what you can expect to receive in future decades. That’s why options like Wild Fury Jackpot slot at Aspers Casino are working so hard to make lasting customer relationships now (with bonuses, free spins and high-quality user experiences). They understand that available capital makes it possible for many similar startups to exist in the present economy, but that this is likely to change in the coming decade.
Generation X, the children of the early Boomers, are much fewer in number and will therefore not have as much available cash to put into new investments during their prime earning years. This will make capital more expensive for everybody. Fortunately, the even bigger Millennial generation is coming up right behind them. In the meantime, though, businesses and individuals should take advantage of cheap capital now. Because it’s not going to last.