Our world is broken. Capitalism is broken. We are facing real problems and, increasingly, the public seems to doubt that the problems are fixable. Our society is beset by pessimism and distrust. Many are lonely and climate change represents an existential threat to our future.
This fund won’t fix everything, but it allows investors to use their resources to address many of the world’s problems. We do that by investing in entrepreneurs who are using business to serve people, connect people, strengthen communities, and increase human health.
This is not a pure social investment or a political tool to effect change. We aim to achieve market-rate venture capital returns by investing in proven and passionate management teams with a differentiated product. We are looking specifically for a team that will build companies that will either add to human flourishing or build/strengthen communities.
Frequently (but not always), these two major themes will also satisfy one of the United Nations Sustainable Development Goals (SDG). If you are not familiar with SDGs, they address issues like eliminating poverty, good health, quality education, clean water, decent work, and climate actions. While governments can address these issues with blunt force and potentially unintended consequences, we believe that businesses are the best methods to address such challenges.
There are many industries and groups that are more knowledgeable about Environmental, Social & Governance (ESG) investing than we are, but we believe that frequently optics are valued more than reality. Portfolios are constructed based on what information companies disclose as opposed to the kind of value they are either adding to or taking away from the world. We are looking for teams that are passionate about solving the world’s problems. If they are successful, then many of the SDGs will be improved as well. We will attempt to avoid those that simply give lip service to meeting a vague objective of improving the world or achieving improvement on one ESG metric by shortchanging their employees or community in other ways.
We plan to use our network to point the Flourish Fund syndicate toward unique opportunities that each of us would feel proud to own long-term. We expect most of our investments to target B2B and B2B2C kinds of markets across multiple industries.
I’ve invested personally and professionally for over 25+ years. I recently retired from a position as a Lead Portfolio Manager with $20 billion+ in AUM in publicly traded securities. While that position was exciting and rewarding, I began to see limited impact on real-world problems from my work. While I certainly was able to influence management’s behavior at certain points, I believe I can have a greater impact by directing this syndicate toward companies that are directly working to solve many of our world’s issues.
Since retirement, I’ve spent time as both a consultant, company advisor, and investor. In consulting/advising, I am helping companies reach new investors, strengthen their investment pitch, and improve their strategic direction. From my career, where I’ve spent time engaging with company management teams, I think I have a good sense of how companies can create value.
Value Creation
We often perceive that most companies create value. If they weren’t creating value for someone, how would they stay in business or attract investors? In reality, many companies and industries are designed to extract value from our world. They may serve to prey on human weakness or those that are vulnerable. In addition, some companies may provide value that they deliver to their customers but at the expense of their employees or the environment. This is a short-sighted business mindset and is harmful to the company, its investors, and capitalism over the long term.
By contrast, the Flourish Fund seeks to invest, encourage, and develop companies that create value for shareholders, employees, customers, partners/suppliers, and the community. Businesses that can change industries and/or influence governmental/industry policy are especially attractive. These are rare opportunities but ones that I will look for intently.
Investment Thesis
The Flourish Fund invests in companies that are adding to human flourishing and strengthening communities.
For human flourishing, we invest in edtech, health tech, and workforce development. In general, these areas have been largely run with human capital alone. We believe that applying technology to these industries can result in better outcomes and improved efficiency. For each vertical, here are some of the areas we are looking to invest:
Healthcare: AI for remote care/diagnostics, the development of efficient tools for clinicians, and personalization of healthcare given the unique differences among various populations/genomes.
Education: New teaching tools, networks for collaboration, and the use of AI for lesson planning/teaching.
Workforce development: Candidate sourcing and training that uses more technology tailored to the individual and company/role.
We are also seeking investments in aging and reducing the impact of climate change (through data analysis and more direct linkages with the financial system).
The second mandate is to strengthen communities. We look for solutions to end our sense of isolation/loneliness that seems to be so strong. Areas of potential investment in this area include:
Network development: Development of various professional and personal networks so that there can be a greater connection that occurs outside of social media (ad-supported network) and within social networks (real connections online and in the real world). The idea is that such a network provides tangible benefits to its members.
Mental health: Tools geared to treat our sense of loneliness/isolation and to develop real community amongst diverse groups.
Neighborhoods: Tools to strengthen neighborhoods with scale. This could be the result of blockchain, social networks, or other community-related technology that could serve to unite people around a common interest/cause.
Reason behind Flourish Fund
My Christian faith has called me to scrutinize my relationship with investments and God. In recent years, I have developed a posture of investing that says that God owns it all. If God owns it all, then where would He put the money? Ultimately, I believe that what I require is God’s will to help solve the world’s problems instead of my own belief about my own skillset or what may make a successful investment. I still bring my knowledge and experience, but it is more a belief that God is allowing me to participate in His plan than that I am creating value on my own. The job of managing a syndicate involves a significant time commitment and a strong degree of due diligence so while I don’t want to minimize my contribution, it comes from the belief that God is sovereign and directing my efforts.
For this fund, the approach is to partner with entrepreneurs to solve the world’s problems. We would like to support their efforts through prayer, investment, and advice. This does not mean that we will only partner with Christian entrepreneurs. I would expect to invest in companies with all faith backgrounds or no faith background at all. We will look for businesses that have at their core some element of redemptive work. How are they working to solve problems that we currently face? Can they make an economic return while also solving these problems?
It probably goes without saying that this fund will not invest in businesses that prey on human weakness or exploit suffering. Instead, we will look for businesses that create value for society by either improving human flourishing and/or bringing communities together.
For the most part, all investing is “impact investing” – it’s just a case of what kind of impact is your investment likely to have? Does it prey on human weakness or suffering? Does it create value for one group of people by extracting value from another? Or does it build & strengthen communities and add to human flourishing? How would you like your capital to impact the world?
If this topic is of interest to you, please explore Faith Driven Investor for more information on this topic. In the public markets, Eventide Funds is a great group that applies many of these approaches described here.
Deal Flow & Final Thoughts
I am a member of several angel groups and accelerators where I see significant deal flow. I also have my own personal relationships that I’ve built over the years that also can provide opportunities. There are other syndicates that may have more deal flow, but I will strive to put together a well-constructed deal memo on each investment. Moreover, I will also be an investor in each deal to ensure good alignment.
Join our syndicate here at AngelList.com and for more on my background please visit my LinkedIn page.
If you are a founder and would like to discuss the potential for the Flourish Fund to make an investment in your firm, please email relevant materials to theflourishfund@gmail.com.