The Magnetic Force of Purpose

Wes Selke
Better Ventures
Published in
7 min readNov 7


When we started Better Ventures in 2011, we had a lot of explaining to do. Back in those days, there were very few venture funds with an explicit mandate to invest in companies focused on positive social/environmental impact and even fewer that were focused on seed stage, mission-driven technology startups. We got a lot of push back from prospective LPs who were skeptical that investing in these types of companies could generate market rate venture returns, and many thought there was an inherent trade off between impact and financial returns, i.e. that pursuing impact meant taking concessionary returns. We always countered that mission-driven companies have a built in competitive advantage that enables them to outperform the market thanks to the magnetic force of purpose.

Our case for the magnetic force of purpose leading to a sustained competitive advantage is as follows:

  • Founders are intrinsically motivated to succeed because they care deeply about solving a big problem. They often tell stories of how they’ve been personally impacted by the problems they’re seeking to solve, which fuels their drive to succeed.
  • Mission-driven companies can attract and retain the best talent because they offer employees something many other companies cannot: meaning and purpose at work. This is increasingly important to Millennial and Gen-Z workers.
  • The brand halo effect provides mission-driven companies with an unfair advantage in attracting loyal customers that prefer to do business with brands that reflect their values. Think purposeful brands such as Patagonia, Ben & Jerry’s, and Whole Foods (pre-Amazon acquisition).

This all sounds good and reasonable, but can we back up these claims with some numbers? While we can say that we have certainly seen these factors at play across our 70+ portfolio companies over the past 12 years, particularly their ability to compete with big tech companies for top talent, it’s important to take a look at the data. We’ll focus on the second and third bullet points since the first is more difficult to quantify.

Attracting the Best Talent

Let’s take a look at attracting the best talent. According to a 2019 McKinsey study, 82% of employees said that having purpose at work is important, while 75% said that purpose should weigh more than profit. Meanwhile, a 2018 HBR research report found that 9 out of 10 employees would be willing to take a pay cut (of up to 23% on average) to find more meaning at work. The HBR article includes a salient quote from Studs Terkel, the author of Working, a seminal book on work published in 1974:

“[Work] is about a search…for daily meaning as well as daily bread, for recognition as well as cash, for astonishment rather than torpor…a happy few [have] a meaning to their work over and beyond the reward of the paycheck.”

If most people are searching for meaning in their work, then companies that offer it should have a competitive advantage in attracting employees over those that don’t. And attracting the best talent is one of the top leading indicators for startup success. This is a trend we’ve seen play out in many of our portfolio companies, which have been able to compete head to head with large tech companies that are offering much richer pay packages.

Happiness at Work = Better Retention

What about job satisfaction — do these companies report a higher level of happy employees who stick around longer? Let’s take a look at the numbers. A 2022 Great Place to Work study found that when people feel their work is “more than just a job,” their commitment to stay in their job increases by a factor of 2–6x. And this isn’t isolated to “intrinsically impactful” categories, such as healthcare, but rather holds true across 11 different industries according to the study:

On the job satisfaction front, McKinsey finds that employees who experience purpose at work report better outcomes across a variety of categories, both at work and in life:

Importantly, employees who find meaning and purpose in their work are not only reporting higher levels of job (and life) satisfaction, they’re also more committed, engaged, connected, and excited. Attracting the best people who are happy and engaged at work and tend to stick around longer enables mission-driven companies to build a sustained competitive advantage.

The Brand Halo Effect

Moving next to the brand halo effect, it’s intuitive today that most consumers prefer to do business with companies that have a positive mission or at least those that “do no evil.” But what do the numbers say? According to the 2020 Zeno Strength of Purpose Study that involved 8k respondents and 75 global brands, 94% of consumers said it was important that companies they engage with have a strong purpose. Additionally, these consumers were 4–6x more likely to “trust, buy, champion and protect those companies with a strong purpose over those with a weaker one.” As one might expect, Millennial and Gen-Z consumers are the most fervent fans, with 90%+ of them reporting that they had acted in support of a purposeful brand, compared to 81% of Gen-Xers and 77% of Boomers.

Among the characteristics of a “purposeful brand” mentioned in the study were fair treatment of employees, ethical and sustainable business practices, support for important social causes, and a diverse and inclusive culture. Unfortunately, according to the respondents, only 37% of companies have a strong purpose. This presents an opportunity for mission-driven companies to stand out, but it also raises the bar for management to ensure they’re practicing what they preach to avoid the perception of “greenwashing.” One great way to do this is by tracking and reporting social and environmental impact metrics. Another is to become a certified B-Corp, which sets a high bar for purpose-driven companies. Better Ventures is a B-Corp, as are many of our portfolio companies, and we measure and report our impact and work closely with our founders to help them track and report theirs.

Financial Outperformance

If the magnetic force of purpose does in fact lead to a sustainable competitive advantage, then what evidence can we find to demonstrate that mission-driven companies actually outperform their non-altruistic peers? It’s worth noting that this analysis has been attempted many times over the years, and causality can be difficult to ascertain (i.e. did that company outperform because they’re mission-driven or because they’re a tech company with a 50% growth rate and 80% gross margins?). That said, a meta-analysis of 2,200 studies (the most comprehensive study on the topic to date) provides strong evidential support that companies focused on environmental, social, and governance (ESG) outperform the market, with 63% of the studies indicating outperformance, while only 8% showed underperformance. The remaining 29% of studies suggested equal performance. So clearly there is very little evidence for concessionary returns (as suggested by the aforementioned skeptical LPs) and in fact quite a bit of evidence for outperformance.

There are, of course, many other benefits of focusing on ESG that are good for business and can lead to outperformance including reduced regulatory and legal exposure, lower costs (e.g. energy savings), and better capital allocation decisions. McKinsey has a good overview of these here. Additionally, we’ve always said that “big problems represent big opportunities,” which is why we’re seeing tremendous tailwinds across many of the areas where we invest. One great example is climate tech, which is benefiting from (1) growing awareness of the need to mitigate climate change and shift to a carbon zero economy and (2) industrial policy via the Inflation Reduction Act, which is pumping billions of dollars into the clean energy transition. Thanks to these tailwinds, climate tech remains strong despite the recent downturn in the venture market.

Our core thesis at Better Ventures is that mission-driven companies outperform the market thanks to the magnetic force of purpose. Purpose leads to a sustained competitive advantage fueled by intrinsic founder motivation, attracting and retaining the best talent, and strong customer loyalty. The data we’ve explored supports our thesis and suggests that these advantages can lead to financial outperformance. There weren’t many VCs focused on mission-driven tech startups in 2011, but it’s great to see interest grow dramatically in the last 12 years as more investors have recognized the opportunity, especially in climate tech. We remain just as bullish today as we were then as more and more bright founders are putting their skills and experience to work to solve big problems.

Get Your Mission On

If you’re launching a world-changing startup or searching for more meaning and purpose in your work, we’d love to hear from you! We’re actively investing in pre-seed and seed stage companies leveraging science & technology to solve big problems across sustainability, health, and equitable opportunity. Additionally, many of our portfolio companies are actively hiring as they scale their businesses. You can find current openings on our Jobs page, and here are just a few to whet your appetite:

What are you waiting for? Come join us!



Wes Selke
Better Ventures

I’m co-founder of Better Ventures, which backs founders on a mission to build a better world. I’m an avid cyclist, father of three, and live in Oakland, CA.