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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

Go deeper

Emergency declaration issued in 17 states and D.C. over fuel pipeline cyberattack

Photo: Luke Sharrett/Bloomberg via Getty Images

The Biden administration said it's "working with" fuel pipeline operator Colonial Pipeline to try and restart operations after a ransomware attack took it offline.

Why it matters: Friday night's cyberattack is "the most significant, successful attack on energy infrastructure" known to have occurred in the U.S., notes energy researcher Amy Myers Jaffe, per Politico. A regional emergency

20 mins ago - World

Sullivan expresses "serious concerns" to Israeli counterpart about Jerusalem violence

Israeli soldiers throw tear gas canisters at Palestinian demonstrators during a protest near the Jewish settlement of Beit El near Ramallah, in the occupied West Bank, on Sunday. Photo: Abbas Momani/AFP via Getty Images

U.S. National Security Adviser Jake Sullivan expressed "serious concerns" Sunday to his Israeli counterpart about "violent confrontations" in Jerusalem and planned evictions of Palestinian families from their homes in the city's east, per a White House statement.

Driving the news: More than 250 Palestinians and several Israeli police officers have been wounded since Friday. Israeli police have used tear gas, stun grenades, water cannons and rubber bullets on protesters, who've thrown "rocks and water bottles" at officers, per NPR. The violence continued Sunday night, AP notes.

Ina Fried, author of Login
Updated 4 hours ago - Technology

Exclusive: GLAAD finds top social media sites "categorically unsafe"

The leading social media sites — Facebook, Twitter, Instagram, TikTok and YouTube — are all "categorically unsafe" for LGBTQ people, according to a new study from GLAAD, the results of which were revealed Sunday on "Axios on HBO."

The big picture: GLAAD had planned to give each of the sites a grade as part of its inaugural social media index, but opted not to give individual grades this year after determining all the leading sites would receive a failing grade.