Investing in Innovation that Addresses Urgent Social Needs

by Professor Dennis Shaughnessy

Kapor Capital based in Oakland, CA represents a new kind of venture capital firm, and one that we think is very much needed to address the problems of economic inequality in the US.

Kapor’s mission is to invest in technology driven seed stage companies that solve social problems across several sectors and improve the lives of millions of people that are too often excluded from the benefits of transformative ideas and innovations. The firm focuses its investments in education, finance, health, work and justice, and on entrepreneurs who are too often overlooked by the traditional venture capital community, especially those from African American and Latinx communities.

The firm’s investment thesis is to fund entrepreneurs who can generate both financial and social returns by: (1) closing access gaps for goods and services in underserved communities, (2) expand economic opportunity in the market and at work, and (3) improve the efficiency and competitiveness of solutions to social and economic problems. Kapor began investing in 2013, and has invested in nearly 80 companies. More than half of its portfolio companies have a founder who is a person of color or woman from an under- represented background. This is certainly rare in the angel and venture capital communities today, and represents a compelling case for the power of business (and profit) to make a positive social impact and lead to reduced economic inequality.

Three examples of portfolio companies that caught my attention:

In the Justice sector, Pigeon.ly is one of Kapor’s portfolio companies. The company focuses on communications problems experienced by incarcerated people. As we know, there are far too many people incarcerated in our country and most are people of color or from low income communities. This business allows families to stay in touch with their friends, family and loved ones in prison, offering easy-to- use communications services that support incarcerated people and their families.

In the General Impact area, Revivn helps companies repurpose their computer hardware so that it can be securely and conveniently donated to organizations and people from low income or under-resourced communities. This business offers a low cost service for business while serving the needs of those who are often left out of the technology equation.

And in it’s Education segment, Newsela offers a unique service in which it provides “fresh and adaptive” reading content across numerous disciplines adjusted for reading levels. It also offers several tools to help teachers understand student engagement level with assigned reading.

Kapor Capital represents the kind of impact investing firm that we hope will prosper and lead to a new generation of socially aware equity investors at the early or seed stage.