The VC Resolution: The Stewardship Pledge for the Innovation Investor
A month ago, the Kauffman Fellows announced their Stewardship Pledge for the Innovation Investor. For those unfamiliar, the Kauffman Fellows are a group of emerging leaders in the venture capital industry spanning more than 500 investors over 22 years (including Victor Gutwein, M25’s founder). The pledge was created by Fellows for anyone’s use — with the hope that it is adopted broadly across the industry and thoroughly absorbed internally and externally. According to Kauffman Fellows CEO Jeff Harbach, the pledge “draws inspiration from the original values of Ewing Marion Kauffman and the Kauffman Foundation as well as the professional codes of law, medicine, and asset management,” and is a living document that will be modified by a volunteer group of Fellows. I’ve copied the full text of the pledge at the end.
As with any industry, there are bad practices and bad actors — too often swept under the rug. The year of 2017 finally brought many of the widespread issues of sexual harassment, abuse and discrimination out in the open, though these ills are still a far degree away from being “fixed.” Unfortunately, we see this as part of a symptom of abuse and moral/ethical flaws that, if left unchecked, can easily creep into any position of power. Much of this gradual decay may seem unintentional and a result of a steady drift over time, but we very much believe that without significant proactive and preventative efforts — one welcomes the potential for their values to become undone with growing influence and power. The examples and stereotypes traditionally came easy for politicians and business tycoons. But this past year it became painfully obvious that any industry where professionals wield a significant amount of power is susceptible.
We at M25 are relatively new to this industry, and much of what we’re building is seeking to improve, modernize and/or disrupt traditional venture practices. We are a newer, smaller fund and it may seem we have little “power.” But we realize our decisions, actions and attitude every day have an impact on the people we interact with — whether it be our founders, co-investors, LPs or others in the community. We have big ambitions, and want to scale our firm without losing sight of the values we built it on. In the future, we want to have grown in our integrity, not lapsed. We want to have a reputation built on the strength of our relationships, not the strength of our non-disparagement agreements. We want to be known as leaders running a top-decile fund in both performance and in character.
A simple pledge will not be enough, but we want it to be a continuous reminder of why we are here and how we will do business. We will use this pledge as a part of a larger commitment to maintain our direction originally laid out in our mission statement: M25 Group seeks to responsibly steward our investors’ capital by sourcing and scaling alternative investments with substantial potential to multiply. We believe the definition of “responsibly steward” is well articulated in this pledge below. So we will uphold it, and encourage others to hold us to it. The year of 2018 can be the beginning of a new reality in our industry — one where responsible stewardship is a critical priority for all. There may be a long way to go against deeply entrenched norms in a slow-moving industry, but isn’t “disruption” Venture Capital’s middle name?
As an investor in innovation, I recognize:
Our industry of innovation capital has the power to drive both private value creation and sustainable, positive societal transformation;
My purpose is to direct capital and expertise to create shared value by accelerating the pace of innovation through company formation and growth; and
My investment decisions affect the well-being of individuals inside and outside my own organization, the companies in which we invest, my capital partners, the industries in which we work, and beyond, both today and in the future.
Therefore, in the spirit of stewardship toward all my stakeholders, I acknowledge and pledge the following:
I will not advance my own interests at the expense of my organization, my investee companies, my capital partners, or society.
I will manage my investments with loyalty and care and I will report the performance and risks of my organization and my investee companies accurately and honestly to my capital partners.
I will understand and uphold, in letter and in spirit, the laws and contracts governing my conduct and that of my enterprise and my investee companies, and refrain from corruption, unfair competition, or other business practices harmful to society.
I will recognize the power imbalance inherent in the relationship between investor and entrepreneur, and will not abuse my position, engage in sexual harassment or discrimination, or condone it in the organizations and communities around me.
I will protect the human rights and dignity of all people impacted by my organization and my investee companies, and oppose discrimination both within my investee companies and in the process of selecting investments.
I will promote a culture of inclusion, seek out diversity of all types, and foster a sense of belonging among all the organizations and communities in which I work. To further continuing awareness and action, I will participate to the extent of my abilities in open discussion and reporting across our industry as well as encourage others to do the same.
I will develop myself, and coach, mentor, and apprentice the next generation of investors.
I will work with my stakeholders to support sustainable inclusive prosperity and to minimize the negative consequences of our actions to the environment and society.
In exercising my professional commitments according to these principles, I recognize that my behavior must set an example of integrity and mutual respect, eliciting trust and esteem from the multiple stakeholders I serve. I will remain accountable to my peers and to society for my actions and for upholding these standards.
Original Source: https://www.kauffmanfellows.org/stewardship-pledge
M25 Group is one of the most active venture capital firms focused solely on early-stage investments in the Midwest. Their objective, analytical approach has helped support their thesis and craft what is known as an ‘index fund of Midwest startups.’ M25 has already invested in over fifty companies since their inception in 2015, and continues to invest in over twenty companies each year. Their collaborative, forward-thinking style and diverse array of investments across industries and business models throughout the region has quickly established them as a key node in the Midwest startup ecosystem.