2) Almost every year, Americans give 2-4x the amount to charity than the entire venture capital industry invests. Private foundations alone most years give more in grants than the entire industry invests.
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1) Venture capital is the most productive way to deploy capital that man has ever invented. It is a tiny, dusty corner of the world with an outsized, massive impact. How small is it?
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3) Local governments spend more on poverty reduction programs alone than the entire VC industry invests. Federal government spending on welfare is about 3-5x the size of the entire industry.
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4) The experiment of Social Impact Capital is what if you deploy venture capital not at the traditional targets of venture capital but at the traditional targets of charity, private foundations, government spending?
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5) Can you replicate this massive impact on these even more massive markets? Can this actually make some headway in these problems that we have not made much progress on using philanthropy and government spending?
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6) Our hypothesis is yes, and, early results at Social Impact Capital are promising.
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The industry burns capital at a rate unmatched by anyone except the government. How is that efficient?
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It’s extremely efficient compared to everyone else in every other sector!
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What metrics are you using to say that? It’s a serious question. I don’t know on what basis you’re saying this.
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Well, in the thread above I say how we're smaller than the grants given by private foundations; and4x smaller than the donations made to non-profits (though this is somewhat skewed by including churches.) We're a tiny, tiny industry compared to the non-profit sector.
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And we're dramatically smaller than any government spending. In fact we're smaller than even a very narrow slice of government spending: if you just count LOCAL gov spending on poverty reduction programs it amounts to $284B and the VC industry is only $131B (2018 numbers).
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Of course VC is way more productive than government spending. If that’s the only competitor, definitely VC wins. I thought you said VC was the most productive industry. I don’t think that is accurate based on what I have seen, but it all depends on how you define productive.
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I define it as what society gets in return for the overall spend.
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That’s kind of subjective. So there is not really any way to prove or disprove that approach. It’s really more of an opinion. But it’s all good. At least I understand what you’re saying now. Cheers.
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The long-run average return on capital invested of the private equity and VC industries is less than 10%! Sure outliers make great returns, but that’s because they’re outliers.
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Well, maybe they should invest in more women GPs. My returns are way better than that.
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can you name the source?
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I’m working on a keynote speech on this and will publish my slides which contain all my sources.
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Also include its localized, insular nature that influenced the same behavior in tech startups, which gave given rise to the Bay Area social issues of unaffordable housing. How to connect VC firms to the solution?
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Any gookd book / resource about this?
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Secrets of Sand Hill Road by
@skupor
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