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Julianne Zimmerman | December 7, 2020

Those of you who follow me on twitter know that I tweet erratically, and I primarily use social media to amplify the endeavors and thought leadership of those who are working directly or indirectly to foster peace, justice, sustainability, and equity, and/or to reframe our existing social constructs to be more inclusive, humane, and creative. And I have been musing for some time now about how the hockey stick or unicorn model with its ethos of move fast and break things is so often extractive and (not creatively) destructive, minting a tiny class of nouveau robber barons at the expense of many other individuals and communities; that dynamic has been exacerbated by the pandemic (among other causal factors). So it happened that last week I was inspired to tweet an insightfully constructed quote from The Guardian columnist Jessica Crispin, about Dolly Parton’s philanthropy:

“Dolly is someone who understands that money is something you do rather than something you have, an insight our politicians and leaders somehow keep missing. People use money to create division, to hurt and destroy. They amass it and sit on it and want to be applauded for it. Dolly uses it to construct the kind of world I bet she wishes she had been born into.”

Most of us will never have extreme wealth. That is a given. But whether we are investing for ourselves or on behalf of others, this reframing of money from something one has to something one does is illuminating and energizing regardless of our personal means or fiduciary scope.

So how might investors do money?

Speed isn’t everything

Several widely used terms offer conceptual entry points into thinking about money as action rather than object, verb rather than noun — wave rather than particle!

Let’s start with Investopedia‘s definition of the velocity of money as “a measurement of the rate at which money is exchanged in an economy. It is the number of times that money moves from one entity to another…High money velocity is usually associated with a healthy, expanding economy. Low money velocity is usually associated with recessions and contractions.” Easy enough. This is a fairly straightforward way to begin contemplating money in motion.

However, this decontextualized speed at which money circulates is defined from a perspective that neglects to take into account where, how, between which entities, or particularly why money flows. Whether speed is a good thing may depend a great deal on where, between whom, in what directions, and in what patterns those flows occur.

Looking at how money flows then, predatory capitalism refers to cultural acceptance of domination and exploitation as normal economic practice, regardless of speed. This premise is so deeply embedded as a normative precept that it can seem like a law of nature that for someone to win others must necessarily lose — and that “winning” under such blood sport terms is admirable. But there is nothing immutable about this state of affairs. It is nothing more or less than an agreed-upon narrative. And as Raj Sisodia and others have found, companies that reject that narrative tend to outperform their peers that adhere to it.

Similarly, contemplating why money flows, the rote response is, “to maximize profit.” But that is at best a coarse oversimplification of an infinitely more complex reality. First, capital flows where humans choose to direct it. And second, humans direct capital to flow for all sorts of reasons, emotions, beliefs, and impulses — homo economicus is a convenient abstraction akin to the point masses and frictionless surfaces of the opening chapters of freshman physics.

Velocity is a vector — so is money

Gathering these perspectives together, money begins to come into focus as a multidimensional vector. Its defining attributes include magnitude, of course, but also speed and direction, origin and objective, place and context, human connection, and other characteristics. And like biological vectors, money functions to transmit and propagate beneficial or malignant effects.

Setting premeditated harms aside, unintended negative impact is baked in when otherwise sophisticated, principled investors follow “best practices” to direct capital to for-profit prisons, corporations that generate profits by paying their workforce a sub-living wage, projects that produce toxic waste and environmental degradation, or other financial constructs with significant “externalities.”

Where do your capital vectors point?

This blog series is called You Get the Future You Invest In by design.

Every investment has impact, for good or ill, by intention or by neglect, whether or not that impact is acknowledged. In very practical terms, where, how, when, to whom, and why we move money shapes our present and creates our future.

We can choose to have money, focusing on how much and investing in conformity with growth at all costs, winner take all, move fast and break things propaganda, complicit in compounding the widespread harms those models inevitably produce, all the while telling ourselves we are masters of capitalism rather than mastered by it.

Or we can choose like Ms. Parton to do money, focusing on to what end, utilizing the tools of capitalism to construct a better, saner, safer, more inclusive, more sustainable, and more humane future — one in which we all benefit.

We can let go of the zero-sum mindset of maximizing local value, in favor of the multiple-win practice of creating net value.

Investing for awesome

For our part, Reinventure invests exclusively in US-based companies led and controlled by BIPOC and/or womxn founders, at breakeven, and poised to grow profitably. We practice a majority-success approach, by which we expect most of the founder teams in our portfolio to succeed because we invest with these founders to grow their enterprises into economic engines that create wealth and opportunity for all stakeholders — investors included.

We routinely hear from well-meaning but misguided professionals who are firmly convinced that our approach to doing money is higher risk, lower return, or substantially more difficult than the conventional practice of venture capital. We hear their complaint that “investable” BIPOC and womxn founders are rare and hard to find, or too expensive to cultivate. And we hear them object as well that investing for returns is hard enough; investing for intentional positive impact just adds unnecessary complexity and reduces the likelihood of generating acceptable IRR / ROI. All of these objections are counterfactual — they are demonstrably false and have been vigorously debunked. But they are not harmless misconceptions. They serve to bolster money as a vector for extractive, destructive, predatory dynamics.

Not only is it possible to give money generatively, as Ms. Parton demonstrates, but we know both from prodigious third party evidence and from firsthand experience* that it is absolutely possible to invest far more generatively than the prevailing practice.

In fact, in light of the large and growing body of evidence that investing for better drives advantageous returns to LPs, advances social / racial / gender justice, and creates expanding ripples of positive economic, environmental, and other positively reinforcing beneficial impacts, there is a growing realization among astute investors that investing for better is a fiduciary duty. Conversely, failing to do multidimensional money is by definition accepting — and creating — lesser outcomes.

Are you ready to practice vector capital, to do multidimensional money? Are you already investing to construct the kind of world you wish you had been born into — to reshape the world we inhabit and the next generation is now being born into? We would love to do money with you. Please contact us. And please share so others can join you!

This post was originally published by Reinventure Capital.

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