May 10, 2019

Kapor Capital wants to dispel myths about do-good investing

Illustration: Axios/Lazaro Gamio

Kapor Capital, a venture capital firm that seeks to invest in startups with a positive societal impact, says its returns are just as good as more traditional seed funds of similar size.

Why it matters: The firm says it wants to dispel the perception that so-called “social impact investing” is just charity and can’t lead to meaningful financial returns.

By the numbers:

  • Kapor says it invested about $60 million across 102 companies between 2011 and 2017. Investments before 2011, including Uber and Twilio were not included in the analysis.
  • IRR (net of fees): 29.02%, which the firm says is in the top quartile according to Pitchbook and Cambridge Associates benchmarks.
  • TVPI: 3.0, which it says also puts it in the top quartile.

Yes, but: The firm’s founders, Mitch Kapor and Freada Kapor Klein, tell Axios that because they don’t subscribe to common VC philosophies like fast growth at all costs, conventional performance metrics don’t quite fit their portfolio.

  • “We also know that for many of our companies that are very focused on impact… it’s many, many times more difficult to raise follow-on capital,” says Kapor Klein, adding that founders from underrepresented groups also face greater challenges like sexual harassment during fundraising. Sixty of the firm's investments (59%) have a founder who identifies as a woman and/or an underrepresented person of color.
  • And to be fair, Kapor Capital is more akin to a family office at the moment, giving it the luxury to pace itself without outside investor pressures.

The bigger picture: “The conventional view is that most businesses are impact neutral and some businesses are positive—but we think that’s inaccurate,” says Kapor.

  • Even if a company’s business doesn’t have red flags, how it treats its employees and local community factors into its overall impact, he explains.
  • “There are many other [companies] that we’ve turned down that the technology is perfectly fine, but it’s not clear who is going to win or lose,” adds Kapor Klein. “If this company is successful and the technology is deployed, will it be gap widening or closing?” Ultimately, if the it's not clear that it could have a positive impact, the firm chooses not to take the risk.

As for Uber, which Kapor Capital backed in 2009, the duo declined to share just yet what it plans to do with the returns.

Go deeper: Tech is “flunking” the diversity test, says activist and venture capitalist Freada Kapor Klein

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U.S. coronavirus updates: Infections number tops 140,000

Data: The Center for Systems Science and Engineering at Johns Hopkins; Map: Andrew Witherspoon/Axios

The novel coronavirus has now infected over 142,000 people in the U.S. — more than any other country in the world, per Johns Hopkins data.

The big picture: COVID-19 had killed over 2,400 people in the U.S. by Sunday night. That's far fewer than in Italy, where over 10,000 people have died — accounting for a third of the global death toll. The number of people who've recovered from the virus in the U.S. exceeded 2,600 Sunday evening.

Go deeperArrowUpdated 5 mins ago - Health

Coronavirus dashboard

Illustration: Sarah Grillo/Axios

  1. Global: Total confirmed cases as of 9 p.m. ET: 721,584 — Total deaths: 33,958 — Total recoveries: 149,122.
  2. U.S.: Leads the world in cases. Total confirmed cases as of 9 p.m. ET: 142,106 — Total deaths: 2,479 — Total recoveries: 2,686.
  3. Federal government latest: President Trump says his administration will extend its "15 Days to Slow the Spread" guidelines until April 30.
  4. Public health updates: Fauci says 100,000 to 200,000 Americans could die from virus.
  5. State updates: Louisiana governor says state is on track to exceed ventilator capacity by end of this week — Cuomo says Trump's mandatory quarantine comments "panicked" some people into fleeing New York
  6. World updates: Italy on Sunday reports 756 new deaths, bringing its total 10,779. Spain reports almost 840 dead, another new daily record that bring its total to over 6,500.
  7. What should I do? Answers about the virus from Axios expertsWhat to know about social distancingQ&A: Minimizing your coronavirus risk
  8. Other resources: CDC on how to avoid the virus, what to do if you get it.

Subscribe to Mike Allen's Axios AM to follow our coronavirus coverage each morning from your inbox.

World coronavirus updates: Cases surge past 720,000

Data: The Center for Systems Science and Engineering at Johns Hopkins, the CDC, and China's Health Ministry. Note: China numbers are for the mainland only and U.S. numbers include repatriated citizens and confirmed plus presumptive cases from the CDC

There are now more than 720,000 confirmed cases of the coronavirus around the world, according to data from Johns Hopkins. The virus has now killed more than 33,000 people — with Italy alone reporting over 10,000 deaths.

The big picture: Governments around the world have stepped up public health and economic measures to stop the spread of the virus and soften the financial impact. In the U.S., now the site of the largest outbreak in the world, President Trump said Sunday that his administration will extend its "15 Days to Slow the Spread" guidelines until April 30.

Go deeperArrowUpdated 1 hour ago - Health