Why Startups Focused on Solving Social Problems Are Attracting Investors

Monday, May 7, 2018

By Karen Greve Young

Blackrock put the business world on notice when Chairman and CEO Larry Fink proclaimed, “To prosper over time, every company must not only deliver financial performance, but also show how it makes a positive contribution to society.” People called it a watershed moment on Wall Street. With $6 trillion in assets, Blackrock has the clout to make chief executives listen – and change ideas about what ‘good business’ means. Now, in order to drive significant social impact, they need to lead by example. The world is watching.

First, though, it is important to acknowledge that the concept of businesses “doing good” is open to interpretation. The idea is nebulous. It can be applied to almost anything, and often is in the business world. Startups looking for funding, and especially those pressed for resources, may try to wrap themselves in social impact language to appeal to both investors and customers without living up to their promise.

Such inconsistency between words and actions dilutes the idea that business can be a force for good instead of greed. Making public commitments to social good without action to back them up sets a dangerous precedent. Failing to follow-through diminishes credibility and significantly increases the risk of customer mistrust.

Photo courtesy of Véronique Debord-Lazaro.

Source: Entrepreneur (link opens in a new window)

impact investing, startups