What Matters Most Matters Even More Now

TL;DR: If this pandemic serves any purpose for venture capital investors, it’s to remind us that our role is to back the fundamental companies of the future — we get to decide where that capital goes. Focusing on addressing humanity’s biggest challenges and opportunities is the best way to build a fairer, nobler and prosperous society — this is how venture must add value now and prove capitalism can be a force for good.

I formally co-founded my venture firm three years ago to back the founders addressing humanity’s biggest challenges and opportunities.

The vision — endlessly wordsmith-ed during the heady times henceforth referred to as “pre-Covid-19” — is “a prosperous civilization that responds effectively to large-scale opportunities and existential threats alike”. The initial lessons of Covid-19 underscore the importance of investing to build such a world.

I went down this path because (i) I saw an untapped opportunity to build a firm that can identify and support founders using breakthrough technologies to advance humankind’s wellbeing non-incrementally, (ii) of a deep-seated belief that capitalism can be a meaningful force for good, and (iii) I was disenchanted by venture’s increasingly narrow focus (in terms of addressable issues, business models, team composition, you name it).

I was confident that our new approach would become an increasing part of the venture landscape, but didn’t know how quickly this would happen. Some established players (Khosla, Lux, etc.) and some emerging firms with hybrid and/or innovative business models (like MIT’s The Engine or Breakthrough Energy Ventures) were increasingly focused on these themes, but it was still a negligible piece of the total.

However, COVID-19 has changed all that. Like most everyone else, I’ve been shaken on both a personal and professional level by the crisis we are engulfed in, and only time will tell how long this acute period will last and how deep and lasting the aftermath will be. But regardless when the dust settles, it is obvious that the mission is more important than ever.

Last year, around the time of the WeWork IPO drama, I naively wrote a post (https://medium.com/@patriciahalfenwexler/https-medium-com-patriciahalfenwexler-the-bright-side-of-the-dark-side-926aa3f32579) discussing the potential silver lining of a market correction. It never crossed my mind that a correction would come in the form it is arriving now, and that it would bring along not only a realignment in capital resources and allocation, but perhaps broad transformation of our entire way of life. I wish this hadn’t happened, and I hope and pray we manage to minimize the negative impacts. But given the reality we are in, I hope we are able to build better political, economic, health and social systems to allow humankind to continue to thrive.

I am heartened that our post-Covid initial assessment confirms the vast majority of companies in our portfolio are well positioned to navigate this new reality both in terms of near-term financing as well as in terms of alignment to serve society’s true needs in this new world — from reducing our dependency on animal farming, to mitigating climate change, to developing a Covid-19 vaccine and CRISPR-based antibacterial infection products, to enhancing satellite data capabilities, improving diagnostics and addressing mental health.

In the near future, it is our job to continue supporting our companies in any way we can, and while we have not lived through this exact situation before, we can offer the experience of navigating a tough investment landscape post 2001 and 2008, and having helped numerous companies in our past professional lives adapt to changing realities. We will also keep our eyes open for the companies being founded now that will change the world and lead us to a brighter future. While we will be cautious to deploy capital in the very near-term, it is also in these times when opportunity arises. We think companies addressing the most important challenges of our time, with longer-term horizons and with teams built around deep conviction will be the ones to succeed in these turbulent times.

Capitalism is on trial, and I plan to help build the iconic companies of tomorrow — the ones laying the foundation for a better future, the ones disrupting un-sustainability. The ones investors can hold up high and be proud to back in order to deliver both compelling financial returns as well as societal returns. However, capitalism is only one piece of the puzzle, and so we plan to allocate a portion of fund carry to non-profit initiatives that align with the firm’s vision and mission. As LPs ourselves, we believe the returns of the fund will be such that we will have more to give back than what we put in, and as GPs, we think the bridge between our core for-profit investments and the relevant non-profits we can support will enhance the entire ecosystem.

Fellow investors — if you see the world as I do or just want to shift in this direction, get in touch with me.

Stay sane and safe.