The ethics of VC — Systems change blabla (#15)
The marble hall of Oslo’s old central bank is a hefty backdrop for a conversation on impact investing with several hundred people. That’s where I found myself recently, waiting behind thick curtains, ready to go on stage at the 2024 Katapult Future Fest’s (KFF) investor day. My panel had a vague title — situating our conversation between purpose, profit and geopolitics. Our little group was similarly randomly put together; at least one of us was a VC investor. Only five minutes into the conversation, I was reminded of some of my frustrations with academia. I got quite angry on stage. Now, a couple of days later, I’m thinking: that wasn’t very smart.
Let’s step back for a second: KFF is one of the most famous gatherings of impact folks in Europe that has been happening every year since xxx. It brings a global community of ‘change makers’ together — not necessarily the anti-capitalists but the activist-capitalists, the ones with a mission. The point of the gathering is to rethink things, push boundaries, be bold. Even the wrist bands and lanterns followed that scheme this year.
Investor day is always the first day, before the Fest really starts. CEOs of foundations come, many ‘wealth holders’ who want to use their family fortunes for good; and impact- or mission driven venture capitalists. The latter group is why I was there.
In my conversations with the organisers in preparation for the conference we spoke a lot about inclusive venture capital and the flaws in the VC model — the misaligned incentives. KFF doesn’t strictly do panels as such but the conference is still more structured than the en-vogue un-conference format. Up until walking into the marble hall in Oslo I didn’t quite know what to expect from the conversation and the crowd but I believed I was open to learning and to being ‘dragged along’ outside of my ESG bubble and into the frontiers of impact. I wasn’t quite ready, was I?
Systems change, blabla
The buzzword of the conference, as of many conversations I’ve been reading online over the last year or so, was clearly ‘systems change’. The system (whichever, really, but definitely the financial system) is broken — and we needed to rethink how it can be made better.
Our panel started off easy. Introductions, some polite conversation about challenges. But then one of my fellow panelists — not the VC — raised a number of wild demands. ‘We need to get away from thinking about profit. We need to have a different kind of fund structure.’ I heard simply speaking: VC is broken and we need to build a different asset class (the panelist called it infrastructure-scale innovation).
The poor VC tried to ask, still very politely: but, what am i supposed to do now, in my day to day? I was reminded of my fellow academics — triggered? — who I spent so much time with in the last decade. It’s great to paint big, bold visions but how do we GET there? VC isn’t broken, it works perfectly well for those on the inside and they won’t go away. We can continue thinking in a little (impact) bubble about what our ideal world should look like, but….
I didn’t quite say it in such a thought-through way but my anger came through when I jumped into the panel; lots of people came up to me afterwards. They mostly had nice things to say. I was happy with myself at first.
Dinner-talk and real experiments
We co-hosted a dinner that evening — controversially in competition to the official conference dinner — and two phenomenal women were our ‘special guests’, Check Warner and Marie Ekeland. The room was full of VCs and limited partners (their investors). I didn’t know all of them but I understand how most of them think and act after research and working with them for five years.
The aperitif helped me to set the tone for the conversation with the two women, interrupting our lovely meal and conversation with our ‘intervention’. Almost naturally, the conversation first between the three of us and then with the whole room picked up from the panel. It took very different turns, however.
The missing pieces I got angry about on the panel are actually being tested and experimented with as we speak. Check and Marie — and some others who weren’t in the room that night — are living examples of those experiments. What they are testing is how the vision and VC-reality can be connected; are ‘aligned evergreen models’ fundable without the 2/20 structure? Can VC work for different kind of long term enterprises, run by different kinds of founders?
There is hope. And as I am now landing in Berlin for my next conference — SuperVenture in Berlin — I want to leave you with one observation and proposal: what we need is more powerful men ‘who can afford it’. We need more LPs willing to fund experiments and more GPs from traditional funds to break out of their comfort and take what might look like a hard step. Going on ‘as before’ will only reproduce existing structures. We need a lot of capital to shift tack. That capital currently sits in the hand of men. We need them — us — to shift.
