Artwork By: Summer Fisher
“Suggesting that companies must choose between doing well and doing good is a false choice. Successful businesses can and must do both.” – Marc Benioff
In 2019 Salesforce CEO Marc Benioff penned an op-ed for The New York Times calling for a new kind of capitalism. In it, he acknowledged the profound inequality in our current system and the need for businesses to value purpose as much as they do profits. I wrote earlier this year about the overwhelming erosion of trust in business and capitalism, and my own responsibility as a business leader to slow that erosion in my own business and community.
Today, I’m contemplating the role VCs play in building or tearing down trust. They have long played a role in business and capitalism, and their influence continues to increase, along with their investments. More capital is entering the market than ever before. Here’s a staggering fact: According to data from PitchBook and the National Venture Capital Association, in 2020 amidst a global pandemic, VCs invested $428M per day into US-based startups.
With more capital going to smaller, earlier-stage businesses, those providing it have an incredible opportunity to have an oversized influence on not only shaping the products and services that come from them, but the values of those businesses as a whole. It’s no secret more and more consumers are recognizing the power their dollar holds, giving more thought about the values behind the businesses they support. It’s when you can align those values that trust can form.
Show us (more than) the money
Luckily, the venture landscape, like most things in the world as of late, is changing. One of the most encouraging headlines I’ve read so far this year was Black and Female Founders Land 30% of the largest US Early Stage Rounds in 2021. While it’s still early in the year, in comparison, out of the $150 billion in US venture investment last year, less than 1% of that went to Black startup founders while teams with at least one female founder went home with about 11% of that funding.
What is encouraging to me about this headline and some of the other storylines I’ve been reading is that it isn’t all about how much money a VC or fund is raising, it’s about what they are investing in. In this case, they’re investing more money, earlier, in more diverse early-stage startups. Especially startups in technology. When all you do is talk about money, people tend to lose trust, because to many, capitalism = greed. Tell us more about the “why” behind the money. By talking about why you made a certain investment – whether it’s because you believe in diversity, recognize the inequality in a certain space, or understand the dire need to address a global issue like the climate crisis – telling that story will help rebuild trust.
Even if a VC isn’t investing in a social issue, it is still impacting some element of society. Perhaps it’s the trust they’ve created in the relationships with your limited partners, portfolio companies, their employees, and even their customers. For example, maybe it’s the value that’s being returned to limited partners, like Sequoia’s, whose investors include Stanford, MIT, Harvard, the Ford Foundation, Mayo Clinic, and others. Show people what the real outcome is, not just the monetary one.
Take High Alpha Innovation for instance. They recognized that many of the most resilient entrepreneurs they meet – immigrants – also face the most challenges with starting and scaling companies. As a result, they recently launched a new venture studio program called Resilient, aimed at co-founding and funding B2B SaaS companies with aspiring immigrant entrepreneurs.
More ventures are also sprouting up to empower women, like How Women Invest (HWI), which is dedicated to supporting women-led companies, with a focus on women of color, through both funding and mentorship. The Ford Foundation, a non-profit that seeks to promote social justice and reduce inequality through grants and fellowships, has their own investment arm “aimed to influence and mobilize a wide spectrum of capital providers—from institutional investors to banks to retail investors—to develop a more inclusive form of capitalism and create a more economically just world.”
When you have the opportunity to do good in the world, take it. And when you’re doing good in the world, share it. Everyone loves a good success story, especially one that benefits people and the planet. As Marc stated in his op-ed “When we finally start focusing on stakeholder value as well as shareholder value, our companies will be more successful, our communities will be more equal, our societies will be more just and our planet will be healthier.”