VC Office Hours: How data can help improve social impact investing

Erin Harkless Moore was always interested in math. So she headed to Wall Street. “It was intoxicating in some ways and incredibly fast-paced,” she recalls. She apparently enjoyed that life, too, given that she worked there for about five years before becoming an investment advisor at Cambridge Associates.

Then, three years ago, Melinda French Gates’ Pivotal Ventures called, wanting Harkless Moore to drive the firm’s investment strategy. “I literally pinched myself,” Harkless Moore told TechCrunch. “I had been looking for an opportunity that would bring together investing in fund managers, women-led funds, diverse-led funds at the early stage, and align with that mission of impact.”

Part-venture fund, part-philanthropic organization, Pivotal Ventures launched in 2015 and uses grants, partnerships, advocacy strategies and investing to support founders and nonprofits. With a $1 billion commitment from French Gates, the firm has employed a data-focused approach to investing, with the primary aim of positioning more women, especially those of color, in decision-making roles. That includes investing in caregiving to allow women to achieve a better work-life balance, advocating for federal paid family leave, encouraging more women to study entrepreneurship, and supporting women in public offices.

So far, it has backed investment platform Ellevest, care service company OndeCare and health advisory platform Tia, according to PitchBook. Harkless Moore said the care economy is a big focus for Pivotal. “It’s a $648 billion market, and it’s ripe for innovation.” Pivotal is also a limited partner in funds such as Magnify Ventures and Leadout Capital, and provides support to help these emerging funds scale.

To get a deeper look at Pivotal’s long-term strategy, we recently sat down with Harkless Moore to talk more about its goals, how data can improve social impact investing, and how she expects technology to help where the government fails.

[This interview has been edited for length and clarity.]

TC: Pivotal says it focuses on sectors where it feels social progress has stalled. What are some of those areas?

EHM: The care economy, the need to create a modern caregiving system that supports families of all types — that’s where innovation starts. We need to get more women into those technology roles, into STEM, into education, so that they can be the founders of tomorrow and the leaders in these tech businesses.

De-biasing AI and machine learning to make those spaces more inclusive and getting women in political power is also incredibly important. We’re working to increase the number of women running for and holding public office, and boost their ability to succeed when they’re there. Lastly, centering women and girls of color across all of our work and helping them magnify the transformative impact of their talents and contributions in our society.

AI continues to be a space of great opportunity and potential. AI is a tool to make things simpler and easier for families to communicate, to take on some of the tasks and burdens that are incredibly challenging. We have a portfolio company in the Magnify Ventures fund called Milo that’s doing just that, leveraging AI technology as a personal assistant for the home. That’s a great space and opportunity across all of the sectors when it’s leveraged in an impactful way.

In a world where so many investors prioritize vibes, why focus on data and analytics for social impact investing?

You can’t manage what you don’t measure. We see the value in tracking the ownership percentages of diversity in our demographic data across the organizations. Looking at that data will let us know if we’re making progress.

Currently, women represent about 16% of decision-making roles in U.S. venture capital firms. It’s important for investors to make sure that we’re monitoring and measuring our progress, because that’ll help us create new models and solutions that scale and bring other partners along as well.

Is it a good or bad thing that technology has often arisen to fill the gaps where our legislation and government have failed us?

It’s a good thing. Technology and the markets can drive impact and change. But at the same time, you need government, systems and policy as well. One alone won’t get the job done.

If we continue at the pace that we’re on now, to drive gender equity, we’re not gonna get there for a very long time. To reach that parity, we have to use all of these tools in our toolkit, investing in market innovation being an important one of them. There could be times that government and policy might lead and business might follow, but that’s why we play across all of those themes in our work.

We have to have collaboration across sectors, sectors and different stakeholders and industries to drive sustainable change. Technology has often been at the forefront, and I’m a firm believer in the value of investing in early-stage companies and in technology to drive real change and impact. But at some point, we have to bring others along as well to have meaningful change in our society.

The ongoing Fearless Fund lawsuit has put many diversity-focused funds and fund managers on edge. Do you see these types of legal challenges increasing as the topic of DEI [diversity, equity, and inclusion] continues to go head-to-head with a resistant Old Guard?

It’s definitely a challenge. The cases and rulings of the past few months have, in my mind, been a bit of a distraction and are taking attention away from the work we are all trying to do. That’s why we’re going to stay the course and continue to do our work, highlighting the inequities that exist.

Hopefully that’ll allow others to continue to see some of these discrepancies and the opportunity that’s presented by continuing to invest in women and women of color. We’re going to stay the course; I hope others do as well. At the end of the day, diversity makes our society smarter and stronger. It supports more innovation.

If we’re going to drive impact, we have to stay the course. I see us continuing to do that, despite some of the headwinds that might be presenting themselves from a legal standpoint.

What else do you anticipate we need to do to move the needle forward for increasing opportunities to fund underrepresented communities?

The capital is important, but our voice is important, too. That’s why we are sharing the stories of our partners, these women who are leading in their communities and deploying capital to businesses that are driving real impact. That’s an important part of our work and our strategy. We’ll continue to highlight them and their stories, in addition to finding them.

The opportunity here is huge. There are so many tremendous women building businesses, investing capital. I would encourage others, if you’re a limited partner, to put the capital to work. I think you’ll be rewarded in doing so.

For those looking to cold pitch Pivotal Ventures, Harkless Moore said they can be reached on all forms of social media, including DMs.

This piece was updated to reflect how long Harkless-Moore was on Wall Street.