Kapor Capital’s Brian Dixon Talks Investing With Impact
When considering what venture to support, Kapor Capital isn’t only looking at a company’s financial health and potential, but an answer to this question: Can the company make the world a better place?
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As a partner at the Oakland-based venture capital firm, Brian Dixon has spent a lot of time with entrepreneurs. He works with companies in their early stages, gets to know the founding team and works with them directly.
Dixon says he’s come to realize how personal it is for the entrepreneurs behind the companies, according to an interview by John Crawford in Babson Magazine, a publication of Babson College.
Kapor invests in companies seeking to address societal issues. Its diverse portfolio includes about 130 companies, such as Pigeonly, which offers an inexpensive way for people to communicate with incarcerated family members; LendUp, a socially responsible lender that provides loans and credit cards to people with insufficient credit; and Velano Vascular, which aims to improve the way blood is drawn in hospitals.
Pigeonly was launched by Frederick Hutson, a former Air Force aircraft electrician and former prison inmate who used his personal experience to solve a problem for millions of people — how to communicate better with loved ones who are behind bars.
And one of the founders of Velano Vascular has Crohn’s disease and has spent a lot of time in hospitals.
It’s personal, Dixon said. Founders tell him from the heart about their experiences. “That story of the lived experience is what separates someone who will go above and beyond to see an idea through … The impact companies that do it right think of all stakeholders.”
Impact investing isn’t exactly new. During apartheid South Africa, some investors divested from companies doing business there. Other investors may avoid alcohol, gambling, or tobacco businesses, choosing not to put their money in companies that don’t align with their values.
However, a popular form of socially conscious investing called ESG is trending, said Patrick Gregory, senior lecturer of finance at Babson and director of the Stephen D. Cutler Center for Investments and Finance.
Environmental, social, and governance investors, or ESG investors, may look at companies in terms of how much carbon the company is emitting, how they treat their workforce and how transparent the company is. The investors do this as part of a routine evaluation of a business.
Nearly $23 trillion in investments — about 25 percent of all assets managed around the world — have some sort of ESG mandate, according to Morgan Stanley, Babson Magazine reported.
“People are voting with their money,” Gregory said. “It’s an area of interest to our students.”
Impact investing is a growing trend in the financial world and has two main goals, Crawford reported.
1. Make a profit.
2. Social and environmental returns on investment.
Kapor focuses on tech companies trying to close inequality gaps in access, opportunity, or outcome for low-income communities and communities of color. Health, education, and finance are among the sectors it invests in.
Priya Parrish is a partner and chief investment office at Impact Engine, a Chicago investment firm committed to making positive social and environmental change.
“People think about the implications of the items that they buy,” Parrish said. “Why not think about it regarding your investment portfolio?”