Zebra Companies & Other Impact Investments
A lot of good things are in the world today. Unfortunately, there also are a lot of things that need to be fixed. For socially-conscious citizens, it’s important to avoid getting overwhelmed, by taking a step back and pausing to reflect. You only can work with resources available to you from where you are. For impact investors, this means putting resources toward changes in venture capital structure.
Impact investors have a lot going for them. They’re more likely to be educated and have a certain amount of privilege that allows them to influence where capital goes; this means they’re able to take steps toward changing ingrained biases in the economy. With their money, they have the power to choose to benefit the greater good and pick ideas that reduce systemic biases. So where can impact investors put their attention and money to make an impact?
Zebra Companies Defined Our economy rewards quantity, consumption, quick exits, shareholder profits, and causing disruptions in various industries and institutions, including democracy itself. In today’s world, we need companies that repair broken systems, cultivate connections and positive growth, and connect people and resources. This is where zebra companies come in.
Zebra companies are organizations that profit and improve society without sacrificing one or the other. These companies encourage mutualism: If everyone contributes, everyone benefits. Their growth is more sustainable, they create new and quality solutions to problems, and aim to achieve prosperity in general, rather than profit. What’s important about zebra companies today is they recognize business is about more than money. Focusing on pure profit is going to make the environment, the community, and the world at large suffer and reinforce existing biased systems. Zebra companies practice the good behaviors that lead to good outcomes, and avoid falling prey to practices other companies employ that promote toxic workplace cultures, hurt workers and skirt protective regulations. Zebra companies exist as evidence businesses can be profitable, solve problems that are significant and meaningful in the world, and take steps toward repairing social systems.
The Perks of Zebra Companies The business models of zebra companies are designed to be successful in more ways than just profit. When your goal is to challenge the status quo established by other businesses as well as society, you create a situation in which everyone wins. Very deliberate changes in investment vehicles will change how people invest and who’s involved, by taking impact investing principles into account. Zebra companies look at people and processes to mend inequalities.
People Zebra companies might borrow their processes from Wall Street and Silicon Valley, which can be considered unbalanced, but they try to support and get input from real people. Many of them are started by women and others from underrepresented communities, and source their ideas and people from alternative sources to mitigate bias where they can. They support diverse teams to have as many voices making decisions as possible. When it comes to innovation, zebra companies tend to keep things local; they find solutions to fund ideas from overlooked places and people, and do what they can to expand their reaches.
Processes Investments are all about risk and return. In traditional investing, this means a few people become very wealthy, and while jobs may be created, they’re not necessarily for everyone in the middle class, or even for most of the country. Zebra companies explore alternative investment structures such as revenue sharing, dividend and employee stock ownership. These systems also search for ways to support entrepreneurial growth in a way that doesn’t involve consolidation or acquisitions by larger companies.
The Challenges Facing Zebra Companies Of course, everything a zebra company can do is affected by whether it can survive in the marketplace — something that’s challenging for a lot of them. Zebra companies are intentionally created and never come about by accident, and the current system doesn’t support them as they are created or try to grow.
Part of the problem is there isn’t enough proof of success for skeptics. Many zebra companies don’t survive long enough to become financially successful or socially celebrated, or they ultimately default to the traditional strategy of growing for profit; there aren’t many examples to look up to or emulate. Investors in startups can be wary of alternative ideas, which means zebra companies might not get off the ground because they cannot get the funds they need to prove their processes work.
Zebra companies also are stuck in the unfortunate situation where tax law tries to force them into one of two labels: for-profit and nonprofit. A business either can be taxed or be a deduction on taxes each year, and the tax system isn’t built to support a paradigm that strikes a balance between the two. This can be tricky for businesses to sort out.
While impact investing is a broader field than many skeptics think it is, zebra companies can fall under particular industries. While clean technology, microfinance and health are great causes to champion, the field could use growth in other sectors and institutions that need it, such as journalism or education. Investors like you can make measures like these possible and support innovators in all areas.
Zebra Companies and Prophecy Impact Investments Making a positive impact not only on the entire world, but also in the investment industry itself is a tall order. There are institutions in place that won’t change overnight, and definitely not without serious effort from passionate people like you. Impact investors turn to companies like Prophecy Impact Investments to support causes they believe in, by putting resources toward zebra companies working on big changes. By investing in zebra companies, you encourage a new generation of investors, foundations, corporations and other socially-conscious allies to create and stick to a mission of bettering their industries and the world. We can help investors like you find the right investment vehicles for your financial situation, goals, risk tolerance and personal beliefs. Learn more about our impact investing process to get started.