The Ethics of VC — what is (virtue) ethics? (#2)

To many VC and non-VC ears, ethical investing sounds like impact investing, corporate social responsibility, doing (moral) good — in short: being a tree-hugger. At worst (for some of the tech-loving but belief-shy VCs), it might even be somehow about religion. But bear with me and let me boil down what I mean when I say ‘the ethics of investing’ from Aristotle and MacIntyre to Foucault and Williams in two broad brush strokes.

Artistotle’s Nichomachaen Ethicsare an almost 2,500 years old philosophy classic. In it, he focused on a simple question: how should man best live? While his Politics are about the perspective of the state (or the regulator), in the Ethics, Aristotle is concerned with the individual (and its society). In the first book, Aristotle describes the good (or best) life as one motivated by undertaking forms of actions whose ends are innately good, a life motivated by the pursuit of virtuous action:

“If, then, there is some end of the things we do, which we desire for its own sake […], and if we do not choose everything for the sake of something else […], clearly this must be the good and the chief good.”

Following Aristotle further, we arrive at a rough approximation of what ethics can be about: happiness — or the good — stemming from virtuous activities (and we will define more clearly below what these might be) that are durable and long term (rather than about short term pleasure).

Still in the first book Aristotle also helps us to understand what the good life can not be: the life of money-making which is one “undertaken under compulsion”. He goes on to argue that “wealth is evidently not the good we are seeking; for it is merely useful and for the sake of something else”. At first, this might be something some investors might feel is not compatible with what VCs do — money is at the core of investing, isn’t it? But a second glimpse this exclusion really helps us to narrow down what — with Aristotle — the ethics of VC could be: deploying the usefulness of money to foster durable and long term, virtuous activities.

Jump more than 2000 years ahead (over Aquinas and Luther) to Alistair MacIntyre, a contemporary Scottish born philosopher who has been working in the US since the 1970s. MacIntyre is a big fan of Aristotle and his idea of what ethics is relates directly to Aristotle’s. In his approach often called virtue ethics, he helps us to understand better what Aristotle’s virtuous activities might consist of:

“A virtue is an acquired human quality the possession and exercise of which tends to enable us to achieve those goods which are internal to practices” (After Virtue, p. 191).”

Virtues will again enable the explorer to “overcome harms, dangers, temptations, and distractions” she encounters — with the ultimate effect of increasing her knowledgeof the good in life as a whole within one’s community (both immediate and historical).


Foucault, a French scholar who thought a lot about ethics towards the end of his life in the 1980s which he spent lecturing at Berkeley, starts one crucial step before virtuous activities; for him, freedom, specifically reflective freedom is the basis of ethics. Human beings have the capacity to reflect, to stand back from their own conduct and constitute it as an object of knowledge, and to act so as to change themselves; this is what Foucault calls reflective freedom. From reflection come practices — see MacIntyre above — geared towards the better life understood in a process of reflection. Foucault calls these technique of the self — practices of control and self-mastery conducive to excellence and a good life (think of a monk and the praying, working and worshipping he engages in as the quintessential ethical being in this respect — towards a good life close(r) to God). The self-mastery would ultimately manifest itself in a detachment from (short term) pleasure (or in the VC world: focusing on quick financial returns).

From Bernard Williams — the last addition to this theoretical underpinning — I want to take a last clue to the question of how one should life. He sees everyone as having a duty to strive for a good state of affairs and the best conditions for the good, right life — but admits that there are a variety of answers to how this could be achieved, i.e. he argues for a diversity of ethical considerations (that are again united in their dismissal of self-interest and egoism). Most importantly, for Williams — as for Foucault –, the good life also starts with reflection:

“Yet under Socratic reflection we seem to be driven to generalize the I and even to adopt, from the force of reflection alone, an ethical perspective.”

As Williams put it in a later section: “The unexamined life is not worth living.”


What are we making from all this for something that venture capital investors could relate to? While this blog will be dedicated to exploring exactly this question further — looking at case studies, different applications, different kinds of theories — there are certain important features of what ethics is about I tried to develop above: in fact we can see that Aristotle and MacIntyre are thinking about ethics as something that is defined in a communal way and practiced within a certain tradition one participates in; for Foucault and Williams, ethics starts with reflection — think before you act — and is about striving for a better life (for you and your community) using certain virtuous techniques of the self. For the latter two in particular, there is no ultimate, prescribed, universal good life everyone must work towards — the guiding values and principles may differ (but ought to be reflected upon). While I can see reflections of both of these virtue ethics traditions in the VC world, I will throughout the following pieces also think through which one can carry more analytical weight.

Writing on the ethics of venture capital @Cambridge_Uni; visiting Stanford and NYU; former: PhD on homelessness at Cambridge, MSc at LSE, BA at ZU