Investing in ventures that address access and opportunity gaps is crucial for creating wealth and fostering justice in startup investing.
Evaluating startups should go beyond financial outcomes and prioritize founders with lived experiences and aligned values to create more impactful and value-aligned investment strategies.
Deep dives
Investing in Impact Startups to Create a Better Future
Frida Capre Klein and Mitch Capre, founders of Cape War Capital, discuss the importance of impact investing and their book 'Closing the Equity Gap'. They believe in investing in companies that not only make money but also address access and opportunity gaps. They emphasize the need to consider who will be better off and who will be worse off if a business succeeds. They provide examples like an educational technology company that offers affordable tutoring to low-income communities, closing the gap in educational achievement. They also emphasize the importance of a founder's distance traveled, resilience, and commitment to the company's mission.
Evaluating Business Models and Founder Values
The guests discuss their approach to evaluating startups beyond solely focusing on financial outcomes. They highlight the importance of understanding the business model and how it serves different populations. They prioritize founders with lived experiences and insights into the problem they are addressing. They mention the metric of 'distance traveled' as a predictor of a founder's resilience and character. They also highlight the need to align investors' values with the founders' and advocate for more investors to support impact-focused startups.
Scaling Impact Startups and Changing Investing Norms
The guests address the challenge of scaling impact startups and the need for aligned investors throughout the capital-raising cycle. They discuss how some investors are now reconsidering their views on successful founders and the types of businesses they invest in. They emphasize the importance of institutional change, urging foundations and university endowments to align their investing strategies with their values. They also advocate for tearing down the traditional wall between mission and investing in order to create more impactful and value-aligned investment strategies.
Much of the business world has bought into the idea of stakeholder capitalism. But Freada Kapor Klein and Mitch Kapor say that doing some good by doing well isn’t enough when the business impact still creates negative effects and broader disparities overall. Freada, with a background in social justice and empirical research, and Mitch, an entrepreneur and investor who got his start making early spreadsheet software, strive to invest in ventures that close the distance between those with wealth and privilege and those without. The founders explain their metrics and decision-making process at Kapor Capital. The profitable firm explicitly invests in tech startups serving low-income and underrepresented communities. Freada and Mitch wrote the book Closing the Equity Gap: Creating Wealth and Fostering Justice in Startup Investing.
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