Backing S**t That Matters
Over a year ago during a coffee catchup, Chrys Chrysanthou, a fellow London-based VC made an off-hand comment: “We need to start backing shit that matters!” Little did he know that the comment would sit with me for some time and influence my investment focus.
It struck me again when visiting a VC on Sand Hill road and looking at the clustering of firms around the Rosewood Hotel. The names a short walk from the hotel, by quick math, represent over $45 billion of assets under management (without including another $40B from Silver Lake in the bottom right or $150B from KKR).
What struck me was how much of the future of our world was being decided upon by (mostly) white men in fleece in that square mile. From which robots we would interact with, to what “transportation” would mean in the decades ahead, to whether we would eat soy-based or lab-grown meat in our burgers, to what type of rockets we might ship into space… to also what games we would spend money on, or what virtual reality headset we would use for Ready Player One-style escapism.
And while I have much yet to prove in terms of proving I can pick the right companies and founders to back, the thought that Chrys planted and my walk down Sand Hill reiterated, is that I am grateful for the fortune to do the job that I do... But that I should also take into account the broader impact that me and others could have by backing a company or an idea.
If all the stars align, and the company scales to the level of ambition of the founder, its financial outcome could be huge. But so could the impact on our society (in both positive and negative ways). So, perhaps unconsciously at first, my filter for evaluating investments has taken on a new dimension in which I try to also gauge the mission and impact these startups (at scale) could have in a broader sense than just CAC/LTV ratios, MRRs or exit potentials.
On reflection, my last three investments have also been able to provide an answer to whether their mission is something that matters:
- Aire is using advanced algorithms to create a credit score for those who cannot get one from the incumbent credit bureaus. If, like Aneesh Varma, the founder, and I, you have moved to a new country or become “self-employed” you too would realise how much of our modern financial system relies on a historically-looking and quite skewed credit score number. Helping people gain accessibility to financial products at scale qualifies as “shit that matters!”
- Echo , the UK-based prescription-management platform, is seeking to help patients on repeat prescriptions for long-term diseases more easily gain access to their medications, help them adhere to their doctor’s prescription and help make them healthier, all while helping the National Health Service save billions of Pounds wasted each year. As Steve O'Hear from Techcrunch put it when writing up the news of the Series A “Echo could actually be an example of a Silicon Valley-styled startup that genuinely creates more value than it captures.” Echo’s vision certainly qualifies as “shit that matters!”
- Unacast has a mission to help map the real world in a way that integrates privacy-by-design. Yes, the easy money lies in reselling this to advertising platforms, but the real long-term value comes from making that high quality data accessible to the likes of city planners, or retail developers, academics or researchers. The data-set at scale can better inform policy decisions, integrate with other data-sets like urban transport schedules, pollution levels, school capacity to use modern data mining techniques to make our physical world better understood and better for us as individuals and as communities. It’s also “shit that matters!”
And as I continue to meet with entrepreneurs and hear of their aspirations and missions, I have made a purposeful decision, which I wanted to state publicly via this post, to continue applying the filter of backing “shit that matters” because, as Steve put it, there is a model in which startups can get big (and profitable) but the broader impact on the world we are hoping to leave behind can be twice as impactful!
And to be clear, this is not about “impact investing.” This is still about optimising for Venture-style power-law returns, but about realising that truly transformative ideas will have intangible secondary effects which should be taken into account.
PS: Please do send me over founders who are building shit that matters!