Higher Purpose Venture Capital: New Book Highlights the Rise of Socially Driven Enterprises

In recent years, an increasing number of Americans have begun questioning capitalism. Gone are the days of Gordon Gekko’s capitalistic Wall Street mantra, “Greed is good.” In its place is a focus on a more equitable economic system, one that addresses basic human needs like health care, housing, and child care.

Author and socially conscious venture capitalist Ron Levin couldn’t agree with this vision more. We asked him a few questions about why society’s view of capitalism is changing and what for-profit businesses might look like in the near future.

Grit Daily: When you ask people to describe capitalism, the words “CEOs,” “profit,” and “corporate greed” inevitably crop up. Yet you assert that capitalism is at its best when it’s focused on altruism and solving society’s problems. How so?

Ron Levin: The word “capitalism” simply means a system whereby the initial cost to produce goods and services is contributed by investors, who then own and control the means of production. These investors are entitled to share the profits among themselves. There’s no moral component. The investors may choose to be greedy and act unethically, or they may choose to be generous and act altruistically.

For too long, the greedy investors have dominated public discourse, but that’s changing. We’re now seeing a new generation of capitalists who reject the discredited ethos of “take the money and run.” They see the big picture and the power of capitalism to make life better for every stakeholder.

Grit Daily: You say that socially responsible capitalism can be wildly profitable. What are some examples?

Ron Levin: There are so many it’s difficult to know where to start! A few examples include Patagonia, the very first benefit corporation in California; Navajo Power, founded to ensure that the clean energy economy was equitable; Dr. Bronner’s, the family-owned and operated soapmaking company founded in 1948 by a third-generation German soap maker, Emanuel Bronner; Allbirds, a direct-to-consumer shoe and apparel company; and even some Big Tech companies like Microsoft, which has pledged to become carbon negative, replenish more water than it uses, and reach zero waste by 2030.

Grit Daily: In your book Higher Purpose Venture Capital, you showcase dozens of startups that are closing the gap between the “haves” and “have-nots.” What issues are they focused on?

Ron Levin: They’re focused on the issues that plague our current culture: discrimination, hunger, homelessness, injustice, environmental damage. More broadly, these startups recognize that a wealth-creating entity such as a corporation will be healthier and more likely to thrive if it takes care of the people it serves.

The idea of simply extracting as much cash as possible from the community is a terrible long-term goal that will lead to collapse. On the other hand, being a good steward of the community’s resources, both natural and human, is a powerful strategy for growth.

Grit Daily: What about the role of federal, state, and local governments? Some would argue that these issues are the government’s problems to solve.

Ron Levin: History has shown repeatedly that when private enterprise and government agencies work together as partners, healthy results can be multiplied.

This isn’t to say that a misguided government should rubber-stamp whatever the private sector wants to do. Sadly, we see in laissez-faire administrations how bad actors in government and business can conspire to do terrible damage to people and the environment. Happily, we also see that moral and ethical people in government and private enterprise can work together to solve difficult problems.

Government agencies and lawmakers have tremendous power to shape and influence the activities of the private sector. But the government is also limited in its day-to-day involvement; it’s in businesses — both large and small — where policy becomes a reality and where you see the real-world results of one ethical viewpoint versus another.

Grit Daily: Venture capitalists and investors, by their own admission, often live in privileged bubbles. How can they shift from addressing first-world inconveniences to solving real-world problems?

Ron Levin: That’s simply a question that every capitalist and investor needs to answer for themselves. Some investors look at investing as a game, like Monopoly, where the winner has the biggest bank account.

But an increasing number of investors realize that cash isn’t the only measure of success; it’s more about your influence and legacy and whether you’ve been a force for good. It’s more challenging, and far more satisfying, to invest and make a profit while leaving the world a better place than you found it.

Grit Daily: What about the Average Joe investor? How can they get started?

Ron Levin: There are many opportunities for entry-level or everyday investors to begin their journey of socially responsible investing (SRI).

When you start, avoid getting caught up in the risks of day trading. Be a value investor. Learn about socially responsible businesses and invest in the companies you like—because if you like them, other people are likely to like them, too, thereby boosting their value.

You can either do “negative screening,” where you eliminate companies that are unacceptable to you, such as cigarette manufacturers, or you can do “positive investing,” where you seek opportunities that align with your values.

You can invest in community development financial institutions (CDFIs), or you can get involved in making micro-loans for startup businesses in both developed and developing nations. If you don’t have time to do your own research, invest in a socially responsible exchange-traded fund (ETF). You’ll find many of them listed online.

Grit Daily: Is there anything you’d like to add that we haven’t asked about?

Ron Levin: It’s encouraging to see so many people becoming interested in socially conscious investing! It’s capitalism the way it was meant to be: a method for people to come together, pool their resources, and accomplish something positive both for themselves and their community. And because profit-driven companies tend to be very sensitive to the needs of the marketplace and adapt to fill those needs, they can create a win-win situation for everyone.