2020 has been a year of social upheaval. Around the world, society is identifying different problems in our culture and pushing for widespread change. While there are notable steps we can all take, from altering exclusionary company policies to signing action-oriented petitions, the VC and investment world has another, often overlooked option: Investing in change-the-world startups.
Increasingly, angel investors and institutional funds have begun allocating a portion of their funds to startups focused on diversity and social good, whether focused on democratized access to healthcare and education, or larger scale issues like climate change.
Initially, shifting funds to empower social good may seem like a hefty feat, however investors can embrace this mindshift in three simple steps: (1) redistributing stagnant investments; (2) leveraging democratized access to change-making startups; and (3) identifying founders tracking toward success.
Allocating more investments to foster change
Most of the world’s money is tied up in stagnant places. Whether invested in real estate, bonds or other traditional vehicles, this capital typically often shows conservative returns to investors — and has negligible impact on society. The intent isn’t malicious.
Most family offices and private wealth managers strive to minimize losses and these sorts of uniformed portfolios are safe. Even the most seasoned investors should incorporate more variety into their portfolios, determining where they can make profitable investments that yield higher returns while advancing societal good. Investors can take small steps to get more confident in expanding their strategies.
To start, reframe your thinking into seeing the potential opportunity rather than the risk. A good way to do this: Look at how high-risk public equities performed over the last five years and compare it to ventures within tech. Investors will see a significant disparity and the opportunity to make different returns.
The idea is not to put an entire profile in a single venture. Rather, an investor should take a portion of their portfolio in a high-risk investment sector, like public equities or fund structures, and put it in a similar risk profile with a better return. Gradually increasing these increments, starting at 15% and slowly scaling up, can help investors to see outsized returns while making a difference in the process.
A world of passion at your fingertips
For startups of all sizes, democratized access to investors will accelerate the use of capital for social good. Until recently, only the world’s wealthiest people had exposure to premium capital, but crowdfunding and accelerator programs have ushered in new opportunities, forging connections that might not have otherwise been possible.
These avenues have opened new doors for investors and startups. Access to developed networks or innovation hubs like Silicon Valley are no longer make-or-breaks for those looking to raise capital. Extended global opportunity for startups also means investors have more options to find promising ventures that align with their values, regardless of their location.
But while crowdfunding and accelerators have made the world more accessible, they come with sizable challenges. Despite making early-stage investment more obtainable, crowdfunding often does not bring the most valuable investors to the table.
Crowdfunding also inundates platforms with poor-quality deal flow, making it more strenuous for investors to connect with fruitful opportunities. Meanwhile, various accelerators and incubation platforms have emerged, which have advanced global connection, but tend to be quite noisy.
To succeed, entrepreneurs need more than capital. Rather, they need strategic support from experienced investors who can help them make decisions and scale in an impactful way. With a world of ideas at their fingertips, investors should take time to sift through their options and find the ideas that move them the most, prioritizing quality deals and looking toward platforms that curate promising connections.
Empowering entrepreneurs poised for success
Now is the right time to invest in startups. People who innovate during the pandemic have triple the hustle of those who build in safer economies. But while the timing is right, it’s equally important that the fit is right. I’m a big believer in investing in potential: Ambition, unwavering tenacity and empathy are desirable qualities that can help bring game-changing ideas to fruition.
If an investor funds a passionate leader with a strong vision and ability to attract talent, then the groundwork is laid to build something meaningful. When considering the change-makers to invest in, ask: Is this the right person to be building this company? Do they have the ability to attract and lead talent? Is the market big enough, and is there a significant enough problem to build a company around?
If the answer isn’t yes to all of these questions, it’s important to gauge if you can see a theoretical exit, or if the company is pre-seed or Series A, if they have the ability to scale to a decent size.
Despite this, investing in startups, no matter how good their intentions, can scare investors. One way to overcome trepidation is to invest in larger-stage startups that seem less risky and then wade into earlier-stage startups at your own pace. Special purpose acquisition companies (SPACs) are also becoming an interesting investment option.
SPACs are corporations formed for the sole purpose of raising investment capital through an IPO. The proceeds are then used to buy one or more existing companies, an option that could decrease anxiety for risk-averse investors looking to expand their comfort zone.
Any strategy an investor chooses to embrace social good is a step in the right direction. Capital is a tangible way to fuel innovation and bring about impactful change.
Democratized access to startups yields more opportunity for investors to find ventures that align with their values while diversifying their profiles can provide tremendous results. And when that return means disrupting the status quo and empowering societal change? Everyone wins.
These two posts should explain much of what I have to say.
Be sure to read the above links (at least read the first one!) before reading the rest of my post.
Growing up I always seen criticism from many leftists- in particular American liberals, Communists (especially those from Russia or descending from former upperclass Soviets), Anarchists, and other political groups leaning towards lefty fiscal economics about how its unfair businessmen like Trump are successful because they already inherited the wealth and profitable company of their parents or they came from upper middle class background and have outstanding education like Bill Gates.
This criticism goes beyond people involved in politics. I cannot tell you how many poor people often scoff at the rich business owners because they are just lucky to have been born from wealthy parents. Hell I even see middle class people who are well off attacking the Bill Gates and other successes as lazy imbeciles who are just "sitting on their butts all day long" and they are hoarding wealth so it should be distributed. I seen from the general populace, both poor and middle class, attack the capitalist system because business men aren't really doing hardwork nor are they producing anything of value.
I will admit just for the sake of what I will say in a minute that I am not a conservative. I've been raised in a minarchist household that favors neither leftist nor rightest view but merely view government should have minimal interaction in everything from what movies you watch to visiting a brothel to AK47 owndership. So yes I already have views that are contradictory to conservative idealism.
Yet I could never understand the criticism "business men are lazy because they inherited their richness" and "running a business is as easy as 123!". Even before I started going into the stock market, I already had first hand experience of how running a business would be like via stays at my auntie (who I mentioned in one of the above reddit links, owns a restaurant). In addition to seeing the dangers and difficulties of kitchen cookings, everytime I stayed over I would always hear her at night getting enraged as she spoke on the phone as she was speaking with employees, partners, and other business associates about so many complex subjects such as paying the bills, trying to get a new insurance company's support, difficulties with kitchen equipment, etc. I could always see how stressed my auntie would be everytime she woke up before she drank coffee and took a bath.
Mind you my auntie is actually quite a successful business owner. At the time she already had a $ 1,000,000 (I was 14 when she had that amount) in one of her bank accounts and when I talked to her which was weeks before I tried to get into stocks and bonds recently, she told me she had amassed a little over $ 10 million in that specific bank account. This is not counting assets, her other bank account savings, etc. But I can see despite being merely 46, she's already full of gray hair (I'm only 22 just to put this into perspective).
So I was not naive to believe I'll get rich quick when I tried to enter stock market recently as I already know first hand how hard business can be. Yet even I was caught off guard at how simplistic stuff such as comparing different stocks in chart analysis could be.
So it makes me wonder why the politically left and anarchist as well as poor and many middle class people think running a business and investments is a cakewake? And why many of them think just because Trump was given a lot of cash to start business by his already rich dad that it was easy as playing video games for him to run his enterprises?
I mean has any one seen how Tom Kalinske left his job as CEO of Sega of America with grey hair just because the stress of company politics got him? Or how medical analysts are saying Steve Jobs had a relatively young death because of his diseases which they theorized was probably caused by being overworked running Apple?
People who ran business before and made investments, I would like your input!
A slew of big name entrepreneurs and celebrities are really circling the drain with their latest investment.
Led by Greycroft, a who’s who of celebrity investors, including Mark Cuban, Marc Benioff, Iron Man and Pepper Potts (er… Robert Downey Jr. and Gwyneth Paltrow), Uber’s chief executive Dara Khosrowshahi, Seattle Seahawks quarterback Russell Wilson, Ashton Kutcher and Guy Oseary, and Code.org founder Hadi Partovi are investing $ 3 million into the new toilet paper brand Cloud Paper. (Grammy Award-winning singer/songwriter Ciara, serial-entrepreneur Grant Ries, Muse Capital, and Ashley and Marc Merrill are also backing the company.)
Why? Because they’re hoping to save the environment.
Founded by Ryan Fritsch and Austin Watkins, two former employees of Khosrowshahi’s at Uber who went on to take roles at the logistics startup Convoy, Cloud Paper is one of several companies trying to get consumers to make the switch to bamboo-based toilet paper. But it may be the only one to get such high-profile investors to flush it with wads of cash.
A year-and-a-half in the making, Cloud Paper began when the two colleagues started talking about launching their own business, but one that could have an immediate impact on the climate crisis they saw as the most pressing societal issue.
They settled on toilet paper because of its massive contribution to deforestation, a key contributing factor to climate change. According to statistics provided by the company, 15% of deforestation is due to toilet paper production alone, and roughly 40,000 trees per year are cut down for U.S. consumers to wipe up (with toilet paper and paper towels. The company estimates that an average household could save more than 250 trees by switching to bamboo based toilet paper (ideally theirs).
“We wanted Cloud Paper to be a force for good in the world,” said Watkins. “We wanted to find something similar to taxis and trucking in terms of the size of the market and something that could have a really big impact on the community and the environment from day one.”
To ensure that impact, the company is offsetting twice the amount of carbon emissions that are generated from its business operations and has done so since day one, the founders said.
Currently, the company sells directly to businesses, which were its initial market, and has recently launched a direct to consumer service where its sells its bamboo toilet paper at a cost of $ 28 for 24 rolls. A price point roughly in line with the industry’s going rate for rolls.
“We have been investing in several companies over the last five to 10 years that have been in this vein,” said Greycroft venture partner Alison Lange Engel. What compelled the firm to back Fritsch and Watkins was the background in logistics and consumer products and the business-to-business focus that the two entrepreneurs initially went to market with, Engel said.
And the selection of bamboo as the source product was no accident. “Bamboo sequester more carbon and releases more oxygen,” said Fritsch. “It’s a magical plant to keep growing and harvesting… especially when the alternative is an old-growth forest.”
Supply Chain Startup: Nearly 20 years of startup investing Modern Materials Handling
“startups when:1d” – Google News