We should invest in impact
When I talk to entrepreneurs and investors, a topic that comes up often is the mindset of investors and why they are not investing in your startup, idea or solution. Give or take 80% of the investors I talk with have the mindset of wanting to work with a startup that is almost a ‘guarantee’ for them. That they will make a certain amount of money each year or that the startup has to have at minimum 500k-1M in annual revenue.
Although, I understand this mindset of having this requirement, I believe it kills innovation and pushes future solutions down the road. In order to get investment, you need money, and in order to get money, you need investment. So ultimately, this weeds out many early stage companies trying to startup an idea with no revenues.
What I believe is necessary and more important than revenue, is the belief of an idea to be the future. It’s a belief that this will one day happen, and you want others to invest in your idea to make it come alive faster than it would have happened without any investment. Or maybe that idea would have never happened without investors believing in it happening.
I fully believe that you’ll have more successes in the long run if you look at the future and see companies from the standpoint of making ideas that are needed in our society, come to life faster through funding. If investors are able to fund these ideas and make the future come to life faster, we’ll have more success stories that will trickle down to future investors investing in our future ideas. And that trickle down effect will help improve the investment community and fund ideas that can come to life exponentially faster than ever before. At the same time, it will make more unicorns happen that will fund many more companies to come.
Without angel investors believing in ideas that can someday be the ‘next big thing’, we’ll miss out on huge innovations in our time. And it might take another 10 or 20 years before a group of people can come along to disrupt the environment to make it happen again.
Ultimately, investors need to have the mindset of impact over money. That’s hard for a lot of people to be okay with, but I see resources (or money) being a tool to impact our world, rather than buying things with it. As an investor myself, I use my time as a resource to move our world forward. Elon Musk uses his time, resources and power to move ideas to solutions that are making an impact today. Elon doesn’t care about how much money he has and what he’s going to spend it on.
What he cares about, is how he’s going to make a vision of the future come to life today to impact the world we live in and keep us around for many years to come.
His companies are future ideas and solutions to a few of our world problems. And if Elon really cared about his money, he would not have exhausted all of it, to be the ‘angel investor’ to make his ideas come to life faster. If not for Elon investing in his own belief of the future, we might not have had a SpaceX or Tesla company exist today or the future.
Yes, you can invest in companies to make an impact and a monetary gain. But just like an entrepreneur’s mindset is important to not just be focused on monetary gains but mission oriented, so should an investor’s mindset. The mindset should be that an investor wants to use his/her resources to validate a concept, that can scale infinitely and that can change the world. Ultimately, with that impact, the startup would make a monetary gain, which would share with the investors that helped them out in the first place. But what’s most important is that the impact came first and the monetary gain, after.
If you can focus on impact, and rally significant support for it, there’s no reason why something that makes a huge impact can’t make a huge gain for the investors. Not only will that gain be filled by money but with an impact bigger than the money itself. And you can use the gains that you got from this one investment, to impact many other important problems in our world. I believe this is a good way about looking at our world and how we can invest in it to move our world forward but focused more on impact rather than money.