In his role as Managing Director of Techstars Sustainability Accelerator in partnership with The Nature Conservancy, Zach Nies connects social entrepreneurs with investors, corporations and others to drive innovative work and scale to address global challenges such as climate change. This is a void that Silicon Valley has left open, where, as Nies puts it, the math requires massive, fast scaling for investments to work. This makes it difficult for entrepreneurs with a longer-term vision to solve the ongoing global challenges.
“We’re probably best known for accelerator programs and the belief that entrepreneurs can create a better future,” he says of Boulder, Colorado-based Certified B Corporation. “That’s why we’ve built a global network to help entrepreneurs succeed.”
Most of this work is done through the 45 Techstars accelerator programs. The Techstars Sustainability Accelerator Nies program is run in partnership with The Nature Conservancy, a non-profit organization that focuses on protecting land and water. Choosing companies to join The Nature Conservancy’s mission expands their work and creates opportunities for future partnerships. One example that Nies points out is 2NDNATURE, a company that has developed technologies that allow city administrations to curb rainwater pollution through a cloud-based platform and standardized data collection.
Nies has been a long-time proponent of the purpose-driven business thanks to his previous position at Rally Software, which was the first B Corp to go public and which helped introduce investors to the stakeholder-centric concept of creating good for people and the planet, as well as generating includes benefit. Since then, the mindset of investors has shifted and embraced companies that focus more than just on making a profit. I recently spoke to Nies to learn more about Techstars and his thoughts on the state of impact investing as part of my purpose-driven business research.
Christopher Marquis: Are investors more open and better informed about companies with a social impact?
Zach Nies: For the companies participating in the Techstars program, we ensure that there is a connection between the business model and the impact model. We want an environment that determines the business model because it determines the impact model and vice versa. Capital is important to this influence, but the math only works when you have liquidity events. The bigger questions now are what alternative forms of liquidity events will allow investors to get a return on their capital so they can return it to whoever gave them the money without really affecting the spirit of the company.
For example, several companies in the Techstars program have gone through the B Corp certification process, but it is quite difficult for startups to get the official B Corp seal. They ask for a lot more track record and operational background before getting the final certification. It would be great if there could be an alternative for these younger companies to get credit for approaching a company this way – for that recognition that there is more to shareholders than supremacy and gain.
What I have seen over time are the implications that investors are more open to but also more likely to insist on B Corp certification. It adds an extra element of how the companies are structured and how they want to work.
Marquis: What advice do you give companies to protect their mission as they grow?
Sneeze: It really comes down to incorporating it into the culture because that’s such an important foundation. It’s the discipline of having your mission at the center of hiring and firing: not only are we here to get the job done, we care how we do the job. The bigger you get, the more demands you face. The bigger you get, the more you hire people who are not necessarily into your worldview.
At Rally, a former public company that I also worked for, every new employee had a presentation from the founder that not only explained what we did, but also why we do it the way we do it, and what is the bigger mission behind it work we do.
It was never in anything we put on the market. When Rally submitted its S1, we didn’t mention B Corp certification. It wasn’t what you would proudly describe externally, and it wasn’t real market power yet. We wanted to make sure we weren’t really deviating or making noise when we went public. But it was in the DNA of this larger mission that we were all on, which is figuring out the tools and techniques to empower people to solve these really gnarled global problems. We were also one of the first companies to commit 1% of the equity and you want to make sure of that before you get investors on board.
Marquis: As a Colorado-based company operating outside of the narrower, scalable focus of Silicon Valley, I think you’re looking for non-traditional entrepreneurs. What ideas do you have for making the high-tech ecosystem fairer, more just and more sustainable?
Sneeze: There’s the size of the business and then there’s the benefit. At what point do some of these companies, not because of their size, start to look more like a utility company with greater impact and different regulation?
One thing that is really critical is the role of the founder, whose DNA is projected onto organizations. The founder must explicitly state what type of company he wants to set up. I have portfolio companies in the Bay Area. I have portfolio companies in the US and outside the US. Different dynamics are woven into the structure of these founders, and it’s not that only ambitious people live in Silicon Valley. There are people in Silicon Valley who have a very threefold and conscious mindset. But I think there are problems that arise when the only goal is to grow as fast as possible, at the expense of everything else that stands in your way.
The math of Silicon Valley might make this more likely because if you look at the Monster Venture Funds, the math only works if you are making really big bets on companies and wagering that they can run into billions-dollar companies. If this is not the case, the calculation of the returns for limited partners simply does not work. And so it may be the spread of money in Silicon Valley within them and the size of those funds that is causing this behavior.
Marquis: Your mission is to find talent everywhere, to be inclusive, and to look beyond Silicon Valley and the developed world for entrepreneurs who will save the world. How does a global perspective influence the work of tech stars?
Sneeze: We are hiring worldwide and many of our applicants are from Europe and Africa. Europe is ahead of the United States in terms of regulatory impact on climate change and some of the larger mitigating behaviors. In Africa, there is such a link between the economy of communities and adequate land management. We see many entrepreneurs doing some pretty new things with independent farmers feeding their communities. It’s interesting to see how technologies are created on site. It’s not just about selling software – many of them are sensor-based tools and techniques that can be used in the field.