Why Venture Capital is About Impact

By Julie Castro Abrams

Listen, we all know the negative stereotype of a venture capitalist; who they are and their motivation. For many people they picture the Wolf of Wall Street: lacking scruples, seeking the unicorn at all costs. There have been bad actors without a doubt, but we need to take a look at what is possible when good venture capitalists lead, when great companies are fueled to grow.

We have a huge opportunity to fund the solutions of tomorrow with venture capital and create massive impact for good. We have the potential to redistribute wealth to women who have typically been left out of economic opportunities. We have the potential to fund solutions that align with our values. Venture Capital is at its core a vehicle. When you invest you are making a statement on who you are as a person or as an institution.

What do your investments today say about your values?

I’m not here to judge. It took until I was seriously looking at my investing that a friend gently nudged me to look closely at my portfolio and encouraged me to focus on my mutual funds. I was shocked. Here I was spending my life and my philanthropic capital solving problems that I care about and yet when I looked at the companies in my retirement index funds, my money was going to private prisons, tobacco companies, things I am against.

I am taking charge. And I started The New Table to make sure you could join me to invest based on your values. But we need to start pushing this message further and really talk about impact. That’s why I was thrilled when I saw the panel during GaimsOpp West of the largest due diligence and operational folks in the game put on by Sylvia Kim, Rebel For Good; Carmen Palafox, 2045 Ventures; Carlissia Graham, New Media Ventures; and Mariah Lichtenstern, DiverseCity Ventures about “Doing Impact Right.”

Seriously, watch this panel.

[Embedded Youtube: https://www.youtube.com/watch?v=NPDD1RuoIko]

They covered so many thought provoking questions during that 30 minutes, yet my focus kept coming back to this question:

“What are the barriers to making a real impact with Venture Capital and what are you doing in your role to change this?”

To answer the first part, here are my top barriers:

1. Can venture funds run by women and people of color raise enough to be sustainable— build institutions that last?

2. Can we build funds that are large enough that we can truly shift the market and support women founders to an IPO? Can we fuel companies that previously hit “the Series B Cliff?”

3. Women have 50% of the wealth today, how do we motivate enough women to step up and take a seat at the table?

The panel talks about some of these barriers. The first round of funding often comes from family and friends. This puts women, particularly women of color at a disadvantage due to systemic barriers enforcing wealth gaps.

But it is the second part of this question that I really want us to engage in. What are you doing from where you are right now to change that? Grab your journal and start writing down everything that comes to mind. If you are like me, the first set of thoughts might be defensive.

Here are some of the things I frequently hear or even thought myself:

• I don’t have time to evaluate the opportunity.

• It looks like a barrier that I need to be accredited—I don’t want to fill out forms.

• My money won’t make a difference

• All the jargon is confusing, I’m not sure I can figure it out, so why start.

• I need to focus on ROI, I can’t take a risk like this.

• What if I need the money before 10 years.

Then I started actually planning:

• Turns out “Accredited Investor” is just something you are if you make over $200k a year or have $1 million in assets outside your house.

• Investing in venture firms lets me participate in hot deals and amplify my impact.

• Investing in venture was my key, I don’t have to know it all or learn it all. Venture firms are professionally run by experts. I just need to decide how much to invest and with who.

• As we heard in the panel, women, particularly women of color return the most for their investors. So I want to invest in them.

So when I think now about what I can do to make an impact, I think of guiding women to seize our collective power in venture. I think about The New Table. I think about how together we can overcome these barriers. I think about this:

What do you think about?