CLOSING THE EQUITY GAP

Creating Wealth and Fostering Justice in Startup Investing

By Freada Kapor Klein and Mitch Kapor

Filled with “inspiring example of responsible capitalism.” – Kirkus

Included in the Next Big Idea Club’s list of March Books to Watch

Companies backed by venture capital account for hundreds of billions of dollars in sales and profits. While these companies drive the U.S. economy, they also widen the economic equality gap for low-income communities and communities of color.

In CLOSING THE EQUITY GAP: Creating Wealth and Fostering Justice in Startup Investing (Harper Business; March 14, 2023), tech venture capitalists and founding partners of Kapor Capital, Freada Kapor Klein and Mitch Kapor, offer a “win-win” roadmap for creating wealth and addressing inequalities by flipping the traditional investment model on its head, ultimately proving that investing in gap-closing startups—companies whose services or products close opportunity gaps for both communities of color and low-income communities — is good business.

Committed to doing things differently, Mitch and Freada launched Kapor Capital to challenge the conventional notion that investing for impact is concessionary. Since 2011 they have invested exclusively in gap-closing impact startups and have broadened the definition of success to include top quartile returns and accountability for the impacts a business has on employees, communities, and the planet, helping to launch close to 200 companies engaged in achieving social and economic justice while showing remarkable growth, with many valued in the hundreds of millions or billions of dollars.

Kapor Capital’s latest fund, Fund III, led by recently named managing partners Brian Dixon and Ulili Onavakpuri, raised $126M—making it one of the largest black-led funds to date. Like every VC firm, they have experienced high-profile blowups and total losses. But Kapor Capital’s investing principles have created a stunning new ecosystem of Black and Latinx entrepreneurs, CEOs, and investors, who are responding to social, political, economic, and environmental problems, including Bitwise and Career Karma, companies helping people from underrepresented communities train for and secure jobs in the tech industry, notoriously dominated by White males from Stanford and Harvard; BlocPower, which uses a highly sophisticated software system to identify energy efficiency or inefficiency in low-income neighborhoods; Aclima, which aims “to close equity gaps in race, the environment, economics, education, and health by quantifying disparity as it relates to the quality of air people breathe; and Honor, which uses technology to make home health care more accessible and equitable.

As impact crosses into the $1 trillion mark the authors urge venture capitalists and founders, but also employees, consumers, and shareholders to join their efforts to make a positive impact toward responsible capitalism and a better society for all.

CLOSING THE EQUITY GAP: Creating Wealth and Fostering Justice in Startup Investing by Freada Kapor Klein and Mitch Kapor

On sale: March 14, 2023 ISBN: 9780063268517

Publisher: Harper Business

Format: Hardcover

Pages: 272

Book Website: https://www.harperbusiness.com/book/9780063268517/Closingthe-Equity-Gap-Freada-Kapor-Klein-and-Mitchell-Kapor/

Kapor Capital: https://www.kaporcenter.org/

Kapor Center: https://www.kaporcenter.org/

SMASH: https://www.smash.org/

Freada Kapor Klein and Mitch Kapor are founding partners at Kapor Capital and Co-Chairs of the nonprofit Kapor Center in Oakland, California, and coauthors of CLOSING THE EQUITY GAP: Creating Wealth and Fostering Justice in Startup Investing (Harper Business; March 14, 2023).

Mitch Kapor is a pioneer in the personal computing industry, and an entrepreneur, investor, and advocate for social change. He founded Lotus Development Corporation and designed the Lotus 1-2-3 spreadsheet, cofounded the Electronic Frontier Foundation, and is the founding chair of the Mozilla Foundation, creator of the Firefox web browser. He also serves on the board of SMASH, the Summer Math and Science Honors Academy, a threeyear STEM-intensive residential college prep program that empowers students to deepen their talents and pursue STEM careers.

Freada Kapor Klein is an entrepreneur, activist, and pioneer in the field of organizational culture and diversity. She is the founder of SMASH and cofounded the Alliance Against Sexual Coercion, the first organization in the U.S. to address sexual harassment. She holds a Ph.D. in Social Policy and Research from the Heller School for Social Policy and Management at Brandeis University, and is a member of the Obama Foundation Tech Policy Council, the U.C. Berkeley Chancellor’s Board of Visitors, a board observer of the air quality monitoring company Aclima.io, and a newly elected member of the NAACP National Board of Directors.

TALKING POINTS

  • Why investing in gap-closing startups is good business—and why more people should be doing it
  • Why taking ESG factors into account is a corporate fiduciary responsibility
  • How employees, consumers, and shareholders can join VCs to make a positive impact on capitalism
  • Why “distance traveled” is a better measure of success than degrees and pedigree when investing or hiring
  • Solving Silicon Valley’s meritocracy myth and why we still haven’t made a dent in Tech’s “diversity efforts”
  • The gender bias that still exists in the investment community for women and women of color
  • What we’re still missing when it comes to impact investing, despite its growth
  • How business schools, foundations, endowments can help to close the economic divide
  • How Kapor Capital bucked traditional investment succession plans– and why others should do the same

ADVANCE PRAISE

“In an era of widening divides, visionary leaders try to close the gaps. Few have worked harder or more imaginatively at this than Freada Kapor Klein and Mitch Kapor. Closing the Equity Gap is not just the story of how one firm made investments to lift up a new generation of leaders; it is a blueprint for how all of us can make a difference in people who, in turn, can change the world.”

– Henry Louis Gates, Jr., Alphonse Fletcher University Professor, Harvard University

“This essential read for investors and activists illustrates the many intersections between smart investing and economic and social justice. It provides a blueprint for how to shift the standard investment model to address issues like income inequality, the climate crisis, and more instead of exacerbating them.”

– Al Gore, former Vice President, co-founder and Chairman, Generation Investment Management

“In Closing The Equity Gap, Freada and Mitch Kapor have penned a direct, detailed, indisputable playbook for leveling the playing field for access to capital for entrepreneurs of color, and for closing the wealth, economic, and employment divide that exists in this country. This playbook is not only for the technology and the VC community, but for all leaders in all industries, who want to “close the gap” that exist in their organizations and communities. I love this book!”

– Carla A. Harris, Senior Client Advisor, Morgan Stanley, author of Lead To Win

“Closing the Equity Gap is an inspiring call to action to shift the way we think about impact investing from a niceto-do to a must do. The incredible founders that Freada and Mitch highlight draw on their diverse lived experiences to develop new businesses that close gaps in access, opportunity, and outcome for low-income communities. Their stories show the power and the urgency of investing in the next generation of leaders – with resources, mentoring and support, and connections to other changemakers – from all backgrounds and walks of life to solve big problems. They prove that change is possible, even when it feels hard.”

– Valerie Jarrett, CEO, Obama Foundation

“Mitch and Freada are Silicon Valley disrupters, but not with some new-fangled technology or business model. They simply ask the hard question of founders, executives, and the industry: why don’t companies look like the world they serve? They have been my key partners in building a more inclusive, more human, and higher performing company.”

– Jeff Lawson, co-founder and CEO, Twilio

“Freada Klein and Mitch Kapor are vital leaders shining the light towards changing the world through technology, with the radically true idea that more opportunity and diversity lead to the best outcomes.”

– Garry Tan, CEO, Y Combinator

“Closing the Equity Gap makes an ironclad case for the powerful financial and social returns we can achieve by building more robust pathways to opportunity for all people. This inspiring and forward-thinking book offers a wide array of proof points to help us recalibrate how we think about impact investing and what we can accomplish when we challenge the status quo.”

– Darren Walker, President, Ford Foundation

“The message of Closing the Equity Gap is so necessary for the startup and investing worlds to hear and act on, for much of the same reasons I decided to join. It’s also about empowering entrepreneurs to build businesses run by and for the benefit of those previously left out. For over a decade, Kapor Capital has shown that this is a path they want to take.”

– Serena Williams, Managing Partners, Serena Ventures