VCs Align Around New Beliefs, Investment Tools to Reinforce a Better Data Economy That Puts People First
By Magdi Amin and Eric McCarthy, Omidyar Network
Earlier this year, we assembled a group of like-minded, early-stage technology investors to help transform the data economy. For many consumers, the unchecked collection of their personal data by apps, televisions, cars, vacuums, and virtually every keystroke is beyond creepy; it’s a privacy-violating crisis.
The Race to the Top initiative was born in response to changing consumer preferences, declining trust in technology companies, and desire to reset the industry. Tech companies’ behavior, gathering, and processing of massive amounts of personal data, is at odds with what consumers want. And that behavior puts individual companies and the entire sector at substantial risk.
But that fate is not inevitable; there is a rising subset of tech firms that are setting a new example. Both mature, high-value companies and newcomers that want to solve real-world problems have found ways to deliver products with higher standards of privacy, security, and user control, without compromising value. The venture capitalists (VCs) forming the Race to the Top initiative recognize that their outsized influence as investors comes with responsibility. We select, invest in, and advise companies on privacy, security, algorithmic bias, diversity, and other issues at formative stages because it’s much easier and less costly to embed better practices upfront.
“Value creation requires investing in companies that design for people; manage for trust and accountability; build products that benefit people fairly, and thereby grow sustainably. We want to invest in companies that aim to become the gold standard in building privacy, security, fairness, and inclusivity into their products and processes. We require our portfolio companies to respect human rights, as well as the norms and values of the people and communities they serve.”
In the last eight months, we have convened workshops in Boston, Silicon Valley, and Seattle with other investors, thought leaders, and tech founders to translate these beliefs into a toolkit of investment resources, including:
- a common set of principles (Enter: RT3Now2019) to guide investment decisions that build trust and to help portfolio companies set themselves apart in today’s data economy;
- a due diligence process checklist to assess how companies are currently incorporating these principles; and
- a progression matrix to create a pathway toward good data practices.
We would like to thank the 25 venture capital investors that contributed to the process so far as well as the broader coalition of participants which includes the International Finance Corp, the Information Trust Exchange Governing Association, Consumer Reports, Harvard Kennedy School, Mozilla, and MIT Media Lab. And we look forward, in 2020, to increasing the number of investors actively evaluating the data governance practices of potential investees, guiding their investees to do better, and reviewing their portfolios for opportunities for improvement. Step-by-step, startup-by-startup, forward-looking investors and founders can collectively reverse a downward spiral of distrust with a race to the top — to a much higher standard that makes technology sustainable by putting people first.
As the initiative advances, we encourage additional technology investors, startup CEOs, researchers, and others to contribute to this movement by sharing reactions to principles (Enter: RT3Now2019) and pledging to use them in investment practices. This week, in fact, we will reconvene venture capitalists in New York City to hear their views.
For more information about the Race to the Top initiative, to request a copy of the draft resources, or to submit your comments please respond below.
