Part 1 of a 3-Part Series on Common Myths of Social Impact Investing
An Op-Ed by our Founder and CEO, Andrew Vo
I launched Aidos in 2019 because I had found my life's calling.
The calling to affect Social Equality.
I realized that however small of a change I make during my limited time on Earth, I know that I will have lived a Purpose Driven Life that will have helped many others without a voice.
That is all I can ask from life.
It is my answer to the "meaning of life" question - which I think is 100% person-dependent.
In building out Aidos and researching the prior work on Social Capitalism (props to Chamath Palihapitiya of Social Capital, and Allie Burns of Village Capital), I have come to the realization that there are three Myths about Social Impact Investing.
Myths that taint not only public opinion, but mislead sophisticated investors like Venture Capitalists who misunderstand the true nature of Social Impact investing - what I shall refer to as Diversity Investing as I wrote here for Arianna Huffington's Thrive Global.
Myths that I want to dispel today through a 3-Part Series.
❌ Myth #1 - Social Impact Investing is about Exclusion
This is a carryover from socially responsible investing from the 1980s, and was about excluding certain companies from portfolios due to social criteria, and does NOT reflect the true nature of Social Impact Investing.
Think Anti-Apartheid, Tobacco, and Firearms.
Social Impact Investing is about Inclusion, not Exclusion.
Within Venture Capital, Inclusion in the sense of providing the early-stage capital for exceptional Founders irrespective of their gender, racial profiles, and lifestyle choices.
Why does this matter?
1️⃣ On the investing side for Investors/LPs when selecting VC fund managers.
According to a seminal report on "The Other Diversity Dividend", by examining the decisions of thousands of venture capitalists and thousands of investments, Diversity significantly improves financial performance on measures such as profit, EBITDA, and return on equity.
2️⃣ On the investment side for Founders and Investors/LPs when deciding whether to fund Female Founders, Founders of Color, and openly LGBT Founders.
According to an extensive study of "Women in the Venture Capital Ecosystem", although 12% of decision-makers at U.S. venture capital firms are female, 70% of top-quarterly performing U.S. venture capital funds are led by female-decision makers.
Stay tuned for Part 2 of this 3-Part Series, leading up to a mini-feature video entitled "Myths about Social Impact Investing."