The Oxford definition of technology is “the application of scientific knowledge for practical purposes, especially in industry.” When most people think of technology companies, they may think of Facebook or Google, but the truth is that technology and technological innovation exist in most, if not all, industries in our modern economy. From drones used to grow pineapples in Costa Rica to conveyor systems used to sort used clothes in The Netherlands — technology is everywhere. In this article, I will speak about impact investing in the tech space broadly, but we will dive deeper into the many subsectors of this space in the future.
In November, TELUS, the Canadian telecommunications giant, announced a $100m tech-impact fund. In October, Salesforce launched its second social impact fund of $100m to invest in cloud companies with social missions. These major funds indicate that executives realize that seeking social impact alongside financial return is realistic and feasible at the tech industry’s highest levels.
Furthermore, both of these funds are focusing on early investments, which means that as those companies grow, we will see the tech space as a whole become more grounded in social missions and impact focuses. This shift is extremely important because many of the ethical issues that exist in the tech-space around exploitation, racism, and bias have risen out of a lack of conversation around questions of “what are we really here for?”, “what matters to us more than money?”, and “what we will not do?” — more so than an evil desire to perpetuate our society’s inequalities.
I began with Salesforce and TELUS because they are notable and investing big dollars, but impact investing in tech doesn’t start at dollars — it begins at ideas. Large corporations are rarely innovators. New ideas are tested and validated by smaller companies and then co-opted by larger organizations. In the case of impact investing in tech, concepts like Planet+ and Conscious Tech were created and tested by groups of angel investors and VC firms that were willing to invest in a vision beyond dollars and cents of the positive ways technology can disrupt industries.
There are some concerns that despite the VC world’s best intentions, social innovations don’t align with the scaling and profitability roadmaps used in years past. Traditional companies aim to sell more products at higher margins, but social ventures aim to share their innovations for higher impact. This difference will require investors to engage with their impact startups with new ideas of what a successful investment looks like.
All told, impact investing in the tech space is growing. It is not far-fetched to think of a world where all tech companies think deeply about their impacts before building their product; some European firms have started adding sustainability clauses to their term sheets.
Retail investors do not have many pathways into the impact-tech space, but Koined is building one as we speak. If you are interested in incorporating impact into your tech investment practice, join us at koinedapp.com.
