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General Catalyst CEO Hemant Taneja believes that venture capital is in need of a transformation.

Why it matters: General Catalyst has been expanding what it means to be a VC firm, buying an Ohio health system and offering non-dilutive funding to startups.

Driving the news: Taneja released a book today, called "The Transformation Principles," which argues that positive societal impact is linked to financial returns, rather than being a trade-off.

The following conversation has been edited for length and clarity:

Axios Pro: You write: "I found it embarrassing that people talk about my five degrees from MIT... but nobody cares what grades I got." What grades did you get?

Taneja: "Did you talk to my mom? Not straight As, but mostly As."

How do you think about standardizing responsible investing principles?

"When it's a company at scale, you think about what are the second- and third-order effects of this company in society? We have an active review in every investment decision around that: Where could this company go awry and have unintended consequences, and how do we help them manage those?"

How do you ensure these companies are staying on that path in the long run?

"I think that comes from actively working with founders that are well-intentioned and care about this. And then, our lever, once we're invested, is really about if we're going to invest additionally into the company. Do we believe they're on the right path, or do we say, hey, there's a misalignment?

I think it's going to be very hard to figure out how to think about structure because you don't really know which direction the company is going to go.

As our industry matures — just making this part of the governance, making this a sophisticated dialogue, is the first step. Over time, I'm sure there'll be some best practices that emerge."

President Trump wants to end quarterly earnings. Would that entice more tech companies to go public?

"I bet the best companies would welcome that, and mediocre companies actually need the discipline of keeping their teams on the quarterly cadence."

The administration is imposing a $100,000 fee on new H-1B visas. How are founders reacting?

"The founders are thinking, 'Hey, should we house these folks in Canada, which is in the same time zone, and we don't deal with these H-1B restrictions?' It also puts pressure on the frequency with which you'll do one of these hires."

You write about the "model of innovation" that GC created by buying a hospital, and applying that to defense tech and climate tech. Does that mean you'll buy more companies outright?

"Everything is on the table. We're earlier in those spaces. It's about systematically putting a portfolio together that can act as an ecosystem over time."

VCs are doing more in public markets now, too. As you talk about driving long-term outcomes, are you interested in becoming an activist investor?

"We've actually bought some public companies into our private companies to transform — Accolade, if you saw, was brought into Transcarent. We want to be inclusive in the AI opportunity for all these businesses.

That's not activist. I think that's, we're transformers."

But what about taking stakes in public companies, rather than outright M&A, and then saying 'hey, let's work together?'

"We haven't done that, and we're not working on anything that looks like that. I'm sure we'll do it in the future."

General Catalyst's Hemant Taneja on H-1B visa fallout, activist investing, and defense tech

 Hemant Taneja, Managing Partner, General Catalyst

General Catalyst CEO Hemant Taneja at the Collision conference. Photo: Sam Barnes/Sportsfile for Collision via Getty Images

General Catalyst CEO Hemant Taneja believes that venture capital is in need of a transformation.Why it matters: General Catalyst has been expanding what it means to be a VC firm, buying an <a class="gtmContentClick" data-vars-link-text="Ohio health system" data-vars-click-url="https://www.axios.com/2024/01/17/summa-health-ohio-general-catalyst" data-vars-content-id="12c6066b-24f9-4fb5-a549-c48c72fb7550" data-vars-headline="General Catalyst&#x27;s Hemant Taneja on H-1B visa fallout, activist investing, and defense tech" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2024/01/17/summa-health-ohio-general-catalyst" target="_self">Ohio health system</a> and offering <a class="gtmContentClick" data-vars-link-text="non-dilutive funding" data-vars-click-url="https://www.axios.com/2024/06/30/general-catalyst-new-alternative" data-vars-content-id="12c6066b-24f9-4fb5-a549-c48c72fb7550" data-vars-headline="General Catalyst&#x27;s Hemant Taneja on H-1B visa fallout, activist investing, and defense tech" data-vars-event-category="story" data-vars-sub-category="story" data-vars-item="in_content_link" href="https://www.axios.com/2024/06/30/general-catalyst-new-alternative" target="_self">non-dilutive funding</a> to startups.

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General Catalyst's Hemant Taneja on H-1B visa fallout, activist investing, and defense tech

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