Silicon Valley has long been criticized for operating under an erroneous binary: you must choose between profit or positive social impact. As people around the nation face an ongoing public health emergency, overlapping climate crises, and a long delayed reckoning with race, more people are calling on the tech industry to prioritize social impact over profits. Two vanguard venture capitalists are sending shockwaves through Big Tech by arguing it doesn’t have to choose.
“If you talk to the young people of today, what you hear so often is ‘we want to do good,’” Katie Rae, CEO and managing partner of The Engine, said at the WIRED25 event. The Engine is an MIT-backed venture firm focused on funding long-term projects around sustainability, reducing waste, and advancing public health and preventive medicine.
“So if you just follow the youth, they want to be on a mission that is good for our planet and good for our society,” Rae explained. “You’re gonna make money by being aligned with them. You just sound old when you say ‘You can’t make money by doing good.’”
Prioritizing social impact and listening to the underappreciated is a strength of venture capital, not a weakness, argued Arlan Hamilton, founder and managing partner of Backstage Capital. The five-year-old firm prioritizes investing in companies whose founders are diverse and members of underrepresented groups. Hamilton says she saw the dominance of white males in venture capital as an opportunity.
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“So many people are overlooking us and taking us for granted,” she said. “My thought was, if we have done so much with so little, as I’ve seen so many of us do, what would happen if we were given more? If we had a chance that was not afforded to us prior?”
Progress is slow and the stakes are high. Venture capital investment in the US topped $130 billion in 2019. Still, fewer than 10 percent of venture deals go to founders who are women, people of color, or a part of the LGBTQ+ community. And while Silicon Valley is known for its technical innovations, Rae notes an alarming lack of support from the industry in funding projects that tackle our ongoing climate and energy crises head on. By investing in startups that prioritize this, venture capital can serve as a model for leaders in the value of rejecting the choice between profitability and social impact.
“We have to continue to educate those that make policy,” Rae said. “We also, on the venture capital side, on the entrepreneurship and innovation side, have to show the way. It’s a collaboration that needs to happen.”
By succeeding without dismissing diversity or the environment as lofty ideals, Hamilton believes that the tech industry can catalyze the change already happening around the country.
“This can’t just be a moment,” Hamilton said. “It has to be a movement.”
Portraits by Amanda Edwards/Getty Images and Suzanne Kreiter/The Boston Globe/Getty Images.
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