Capital with a purpose

Earlier this evening, my partner and co-founder of True Ventures, Jon Callaghan, gave a keynote speech as the outgoing chairman of the National Venture Capital Association (NVCA), highlighting the virtues of the venture capital industry and its role in the larger economic well being of society. Too often, technology and venture capital have been defined by the glare on the companies and investors based in Silicon Valley. Monster egos, big money, bigger jets, pointless social media banter— such narratives are popular these days.

But there is another lens through which to look at the venture industry, which Jon (or as I like to call him, JC) pointed out in his speech tonight. What stuck with me were two points that describe the kind of venture capital both JC and I (and the entire True Ventures team) believe in:

  1. an industry that creates industries
  2. an industry of impact

VC is a power to be used purposefully. The decisions investors make have a direct impact on founders, their teams, their teams’ families and most importantly, their communities. I pointed out earlier this month that a startup ecosystem should not be measured by its relative size, but by its impact on the region, its founders and its community at large.

In his speech, Jon drew an appropriate and perhaps even more powerful analogy with the importance of America’s national parks and startup ecosystems. “Like the parks, our industry is something of immense power and beauty,” he said. Just as America’s national parks foster unique ecosystems, various pockets of innovation around the country are proving to be fertile ground for unique startups, nurtured by venture capital.

Today there are 133 such regions in the U.S. They are thriving, though you might not often hear about amazing companies growing in cities such as Ann Arbor, Boulder, Dallas and Portland. And just as national parks are open to all—regardless of background, color, gender or race, the venture capital industry too needs to become more democratic, diverse and inclusive, not just in words, but in thought, actions and results. Our industry needs to do a lot of work—I mean a lot of work—to be inclusive. The road on this front is long and arduous. I am glad to be part of a team that is thinking constantly about how we can try to be better.

I have been focused full-time on venture capital for over two years (though I was a venture partner for about five years before that), and what I have realized is the VC dollar’s ability to create an impact versus the capital deployed. A few days back it was made known that cancer drug startup StemcenTrx was sold to AbbVie for $5.8 billion. Sure the founders, investors and their investors made money—but if their drugs have an impact in fighting cancer, we as people will benefit.

When most people think of WhatsApp, all they can think about is the nearly $20 billion Facebook paid for the company. When I see WhatsApp , I see a network of connections—personal, social and most importantly , human. I see a service that allows me to talk to my mother, stay connected with my college friends and talk to my far-flung community of entrepreneurs. Sequoia and their investors made money. The WhatsApp founders struck gold. The employees of the company got rich. But so did we , as people spread across the planet.

The venture capital business is roughly about $50 billion (give or take) every year, or roughly the amount of revenue Apple took in during the first three months of 2016—and it helps create new industries that employ people and create opportunities and perhaps help the U.S. stay competitive. “There is no industry that better moves capital and talent behind brilliant ideas, and we do this day and night, for ideas big and small,” Jon said in his speech tonight.

Sure the industry funds its share of stuff that feels frivolous – anonymous apps, for example. But the industry also funds ground breaking efforts to tame cancer or clean up nuclear waste. The same industry which funds too many on-demand cleaning services, also helps create the future of media, new applications of genomics and a hyper-connected society.

I have had the privilege to sit next to Jon when he was a board member in my startup, and then around the partner table at True. And for all these years, he has been setting the standard for all of us to focus on investing in founders and ideas that make for a better future. If there is a lesson I learned from him, it was that the founder is a customer, and we need to learn to serve the customer and be the kind of partners that they grow to love.

During his five years at NVCA—four as a board member and one as the chairman—Jon has pushed the importance of long-term thinking, using venture capital to create new industries and betting on big risks , but most importantly focusing on trying to be open—to ideas, people and places. And we have to. After all, as he said this evening, “we are the growth engine for the United States.”

May 5, 2016, San Francisco

A letter from Om

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