How To Invest In Tech And Social Media Startups From A Venture Capitalist

Technology is revolutionizing the way we live and interact with one another. More specifically, social media platforms like Facebook & Instagram are changing the way we do business. More seamless shopping integrations are being added to Instagram daily like product tagging, live shopping on stories, and product launch notifications. The emphasis is on collecting data and bettering these features over time in order to give the best user experience possible.

While adspend is a huge incentive for social platforms to improve results for advertisers, it’s this social aspect of innovation that appeals to many entrepreneurs looking to invest in social media and tech startups. Founder & Chairman of the venture capital firm Jovono, Evan J. Zimmerman is drawn to tech and social media for this very reason. Having invested in numerous tech and social media based companies, Zimmerman says that he strives to create things he wishes already existed.

Zimmerman invests in brands that use technology to solve hard problems, and recently sold his first startup investment, Zeekit, to Walmart for over $200 million. “There are many different layers to tech investment, including identifying market fit, market pace, and risk mitigation,” says Zimmerman. “But focusing on social technology that improves people’s lives is what I invest in.” For example, when Steve Jobs originally started Apple one of his missions was to help the blind. “There’s a social impact in a lot of these technologies,” Zimmerman explains. “Technology changes humanity’s capabilities and, therefore, our ability to influence the world around us.” Jovono also invested early in breakout companies like Paragon, a Y Combinator-backed startup, and Sofar Ocean, which is backed by Union Square Ventures. After speaking with Zimmerman, these were his key insights on what to look for in an investable, upcoming business.

Identifying Potential

It takes a lot of know-how and intuition to understand what social technologies are going to shape the future and what markets are ripe for new entrants. Zimmerman started targeting young companies with Jovono. “Once we got our first big success or two, more prominent companies started letting us in and more co-investors decided to seek us out for their deals,” he elaborates. “A lot of people say ‘I would have invested’ in a deal they could never get into. It is easy to say that. We can prove it with actual investments.” Jovono still invests primarily in early-stage companies with a strong community on social media, but they have since moved on to investing in growth-stage companies with the potential to disrupt the world while helping others. By focusing on potential and capabilities instead of hype, Jovono has invested in great founders from a variety of backgrounds.

Finding Big Impact in the Mundane

Tech investment isn’t always about glamor. Instead, it can be about promoting something low-key that has the potential of helping millions of people. One of the most recent investments eyed by Zimmerman is a company that deals with notarization, something he says may appear rather unexciting on the surface. “Notarization is something that you don’t think about because it costs like 25 bucks,” he says. “In reality, in the US alone, there are over a billion notarizations or 30 million registered notaries.”

Even the prosaic can form the critical infrastructure of daily life for millions of people through technology, it all goes back to the social impact and company’s potential. Much like how social media sites host billions of users and connect family and friends from all across the world; Zimmerman explains, “If a family member has a really serious health issue, and out of bad luck, they are immobile but had to urgently notarize a document, it would be difficult to go and find someone to do this for them, right?” After some research, Zimmerman discovered that there is only one company that facilitates online notarization. And aside from a potential investment, he saw what the company was doing for people with disabilities, injuries or the elderly.

Technology as a Social Accelerant

Technology, or the lack thereof, is relevant to a huge number of worldwide issues. Zimmerman zeroes in on climate change, as an example, showing how many social problems are implicitly bounded by our technological capabilities. “Climate change is, in many ways, a technology problem,” he says. “Society is working on making solar so cheap, that you would be stupid not to use it. And if that is how it works, then you know that people are going to decide to be more environmentally friendly rationally.”

While technology is certainly a game-changer, Zimmerman concedes that solving social issues is more than just new inventions. “I think it’s also about people realizing they need to advocate for progress and new tech like with social platforms which connect and shape the world. Instead, you see people doing things like going to their legislatures, going to their governors, going to their congresspeople, and saying, “There’s a technology that can help with this particular social issue,” but advancement is typically faced with scrutiny and restrictions from the government for tech and social media startups. Zimmerman says. “While technology can’t solve every problem, it can certainly be a great enabler.”