Pledging longer, fewer and deeper bets

Lance Fors

Lance Fors’ background is in the commercial and venture capital world. He founded a biotechnology company, Third Wave Technologies, and eventually sold it. Since then he has focused on social change and entrepreneurship, acting as mentor to a number of social entrepreneurs. Alliance asked him, as someone who had had a foot in both camps, how the concept of risk differs in the for-profit and non-profit sectors. For him, it’s when he puts on his non-profit hat that he’s willing to accept a higher failure rate to try to create systemic solutions.

First, risk is an essential component of any investment, whether in the commercial or the social sector. Obviously, you look at ways of minimizing it in any given situation. I’m a classic early-stage VC investor whether it’s for-profit or non-profit. I like to get in early, I like to find great people, and I like to help them build that organization.

When I’m thinking of the downside risk, the possibility of failure, I look at two things. First, the dollars, whether in the form of equity investment or a Series A fund or a grant, and, second, my non-financial contribution: am I going to sit on the board, how much time will I devote to it, how much of a leadership role am I going to play? Those are the two assets I balance.

Also, of course, there’s the upside risk, the risk of missing opportunities. Again, I look at this in terms of my own position. I’m going to allocate my assets, which are my human and financial capital. I know what deal flow I have now and given that, over the next three years, how many large, small and medium bets can I afford to place?

 
Next Special feature to read

Investing in insurance: reducing vulnerability and risk

Mihir Bhatt