Why Venture Capital

Venture Capital (VC) firms are the major source of funding in the tech sector.

VC invests in high-growth startups. A fund of $200m may invest $1m-2m in 50 startups over a 3 year period, expecting 3-5 of these companies to become “unicorns” — worth $1B — within a 10 year period, in order to return profits to their investors.

Almost every tech company in America raised venture capital. Household names like Google, Facebook, Amazon, SnapChat, Instagram, Spotify, Airbnb, Doordash, Uber, Lyft, Reddit, WhatsApp, LinkedIn, etc, all raised capital from a small group of powerful VC firms, mostly based on a single street in Menlo Park, CA.

VCs are de facto gatekeepers for every tech company created globally — they decide what companies get funded. Clearly, VC is an important focus for ethical investment.

The Institute of Ethical Venture Capital is creating a simple framework — Criteria for Ethical Venture Capital Investment — that documents unethical Venture capital, identifying ways to reinvest in ethical firms that uphold the values of the investing institutions.