What do you do if you want to drive societal innovation through a career in venture capital?

Any startup creating new markets somehow drives societal innovation. Examples of companies like Airbnb and Uber, they allowed regular people make money by renting their houses and driving passengers around, and that alone allowed many young people struggling with employment to find new ways to earn some income. Social impact does not always have to be biotech or cleantech. It can be also something that helps people improve their daily lives.

Venture capital (VC) is a subset of an asset class called private equity. VC entails investing in companies at their earliest stages (pre-seed, seed, Series A, etc.) and requires an unusual appetite for risk. There are many unknowns & investors seek to maximize returns by backing technology companies that have high potential to become "fund returners". To derisk these investments, venture capitalists conduct a thorough analysis to ensure potential company targets fit their investment thesis (e.g., business, operational, and technical due diligence). VC is a great financing mechanism for fostering breakthrough innovation, which is key to economic growth & societal change. A climate tech VC, for example, can invest in the energy transition.

In my experience, there are very few contrarians left in VC because almost everybody is scared to say what they actually think. The easiest way to raise money is to tell a story that feeds into that narrative. Venture teaches you to pattern match, but by definition, you are supposed to invest in companies that break patterns. Following the same mental heuristics as your peers will get you nowhere. My advice is to question everything, blending in will only get you so far. Obviously back your conviction with a good track record. The world is so diverse, we only listen to those with access to a many social media followers, imagine if at least 20% of the world had the opportunity to share their ideas with the people who could build them.

Having an operating background will make a VC investor's job far easier than otherwise. Those who have helped grow businesses - creating a GTM strategy, pricing architecture, vetting sourcing partners, standing new business units, establishing best-in-class financial planning processes, etc. - have an advantage and unique insights into the dynamics of what it takes for a company to go from 0 to 1. This experience allows investors to quickly & practically add value to their portfolio companies, especially those in the pre-seed & seed stages. If you do not already have this operating experience, consider consulting on the side and/or joining a mentorship program.

The best deals come from people you actually take the time to get to know and become friends with. If you view every interaction as transactional, you will not grow prof. or as a person. In my experience, the perfect example of what VC is today, is spending an opportunity to know an individual by asking any question, but it is almost an industry standard to ask for your X account. I’d argue that it’s not a great investment of your time; where you’re competing for attention in a crowded platform, it’s not evergreen content, and good luck consistently saying something that hasn’t already been said. We can create systems that promotes merit-based rewards,allowing for greater integration and convergence of diverse stakeholder needs.

The role of a VC investor is to find the best deals and invest in them before they are obvious bets. But, how do you define "best"? This is where having an operating background & well defined investment thesis helps. Your unique experience and specific standards ensure you wade through an immense well of potential companies with a clear focus/strategy. Finding them is the next challenge. Finding high quality deal flow requires broadening your network well outside of your comfort zone - after all, outliers cannot, by definition, be found in one single place (or accelerator, for example). Expand your radius of connections to maximize the potential impact from your investments.

Start-ups that reduce or mitigate negative impacts usually have different business approaches (and technologies) than those that create a positive impact, even if they are in the same category sector. Look for startups with a clear mission to solve social problems or enhance the quality of life. By focusing on both profit and purpose, you can identify investments that have the potential to drive innovation and societal progress.

Investing in companies with high potential for positive societal impact goes beyond ensuring they operate ethically. You can embed impact measurement into your own investment thesis by choosing to only invest in companies advancing the climate agenda & help us decarbonize hard-to-abate sectors, for example. You can also use specific metrics for impact measurement at any or all stages of the company's involvement: from the deployment of the company's products/services to the internal processes of the company's operations (supply chain standards and/or labor practices, for example). A climate VC investor might define climate impact metrics as any and/or all of the following: CO2 reduction potential, land, energy and/or water efficiencies.

I have already written about this specific topic, but I will reiterate that, in my opinion, it is extremely important to offer valuable support to companies after an investor wires capital. The outsize returns are hiding in this active support investors can uniquely offer to their portfolio companies. Double down on this capital-as-a-service approach to VC investing and you will reap a myriad of benefits beyond the financial returns - you are forging a reputation as someone who truly cares about the companies you invest in and can see the full picture with a long-term view. You can both be opportunistic and impactful in your deals - portfolio founders appreciate a partner who is willing to roll up their sleeves and jump in as needed.

Startups provide a way to create a change in society by positively providing solutions to everyday problem. Startups providing such a solution need to be supported at the solution evolves to find market-fit and ready for scale. VCs having resource/market capital and venture capital are best suited to support journey of startup to have impact on society.

Informational part (community like 24SIX9 knowledge) is the key 🔑 GLOCAL part is the key also… you will identify societal innovation only on Local level of problem understanding and Global level of solution understanding ;) As International Search Engine and Hyper Local New Media person 🧍 who generate commercial traffic with brilliant team with highest ROI (we basically only re-investing everything back in SEO and co-marketing) and only together with the communities we able to grow in regulatory, social and tech landscape with perfect understanding of situation. Why? Because practice is the best teacher and Founders Community like 24SIX9 make all mistakes and share all knowledge that you need to learn.

DO WELL BY DOING GOOD, whenever possible. If you’re a VC and not a non-profit, you do need to have your primary hat be focused on whether investing in a company is going to be a great financial win. Beyond that bar, nothing makes me happier than hitting 2 birds with one stone by also backing companies that are changing the world for the better — Function Health and EdSights are great examples here. Back the kinds of companies and leaders you want to see in this world. You vote with your dollars.