Beyond millennials: This Gen Z investment firm is riding the generational shift

Generation Z — broadly defined as people born from 1995 to 2010 — is the first generation of “true digital natives,” a generation for whom a world without the internet never existed in their lifetimes. Even dial-up is functionally before their time.

While about half of this generation are still teens and middle-schoolers, on the upper end, they’re finishing college, entering the workforce and starting businesses. And their core values are increasingly the values that will influence what products are consumed in the coming decade.

When John Smothers, a senior at University of Delaware and a member of Gen Z himself, decided to start the seed-stage investment firm Dimension Ventures with his older brother Chris (while turning down a dream position at Kapor Capital), they knew that they needed to focus on generational shifts in consumer behavior, as Gen Zers become the influencers.

The values of Gen Z aren’t new, exactly — it’s more a matter of prioritization.

“There are things that a lot of people think are ‘niceties’ — you know, these are ‘nice to haves’ but they’re not definers of what people look for,” said Smothers. “Especially if you’re looking at a consumer packaged goods and commerce company, people are like, ‘OK, well, it has to be branded properly and it has to be priced properly and you have to distribute it properly.”

For Gen Z, other things may be as important as branding, price and distribution. That may include:

• Diversity and inclusion
• Accessibility
• Environmentalism
• Sustainability

While Smothers’ young age means he doesn’t have extensive experience in business, his Dimension Ventures co-managing partner, Jay Fishman, is co-owner and chairman of High Quality Organics and a former board director at Acorns who has over 40 years of experience in early-stage private equity investing.

“We wanted someone with more of a track record, so we reached out Jay Fishman — a good friend — to see if he wanted to be a board partner,” said Smothers.

In addition to John Smothers, Chris Smothers and Fishman, the five-person team includes venture partners Ananta Pandey, senior software engineer and tech lead of urban prototyping at Alphabet’s Sidewalk Labs, and JB Rubinovitz, machine learning lead at Eight Sleep.

“We structure our team in a way to reflect these Gen Z values, for not only diversity of race, gender and culture, but also diversity of experience and understanding,” said Smothers. “So Chris, JB and Ananta are all software engineers and operators, but in very specific fields: JB has a ton of experience in machine learning an artificial intelligence, Chris has been an innovator in consumer internet space and Ananta focuses her time on cities, as she works for the most well known and probably largest urban innovation firms. They each have their own niches that they focus on, that come together.

“Then [there’s] Jay, being a leader in organics, and me, being able to see these trends as a member of the generation, being able to actually understand the way that my peers buy, which is different from the way that Jay’s peers buy, or Chris’ peers would buy.”

The companies Dimension looks for are in the food and technology spaces — which sometimes overlap, but not always.

“There is agtech and some other industries that directly impact organics,” he said, “but primarily the organics companies we’ve been looking at are considered consumer packaged goods like organic juices and organic consumer products such as Beyond Meat.”

And they want to get in early — preferably first.

“Sometimes the founder has a very-early-stage product and some early traction, but almost always we invest before anyone else has invested, or we’re one of the first few people to invest in the company,” said Smothers. “With [podcasting app and previous investment] Brew, we invested in them this past winter before they were accepted into [top seed accelerator Y Combinator], when they were actually a slightly different concept than what they are now. They didn’t have any paying customers on their main platform, they had raised a little bit of money, but we were one of the first checks in, then they went on to raise more funding from there.

“What we look for is the ability to build, ship and iterate really quickly. We like to dig in and invest super super early and then get a decent chunk of ownership for the time, energy and effort as well as the funding we give.”

And, of course, those Gen Z values are non-negotiable.

“We think that this is the perfect time, especially as a venture capital firm, not just to do the right thing, but the necessary thing.”