Ignoring VC is a substantial political risk

Substantial wealth in today's society can often seem like an economic anomaly. The idea that the riches of the wealthy will eventually benefit those with less is rarely evident in reality, leading to a widening wealth gap and growing societal discontent, akin to the historical experiences of France's Ancien Régime. 

 

During the economic challenges of the 1930s, some of the USA's wealthiest individuals, like the Rockefellers, recognised the importance of investing in their workers' well-being. They introduced initiatives like pension funds and in-house social security to preserve their wealth through social progress and innovation. 

 

While governments now provide many social safety nets, substantial wealth must serve a broader purpose. In the words of one of my former UHNWI clients, what's the point of being rich if it means living in a world filled with gas masks and guns?

Traditional practices like charitable giving and political connections for security are no longer sufficient. We've seen the rise of populism in Western societies, often fuelled by media criticism of private and institutional wealth owners. 

 

Higher taxes may be a political gesture, but they alone won't address the underlying issues. Taxation's effectiveness depends on efficient government use of funds, and it might not solve the problem. 

 

The most effective way to maintain wealth legitimacy is by investing in the future, particularly in creating jobs. This involves enabling current generations to adapt to economic changes and providing younger generations with the tools to tackle the challenges they'll face. This is entrepreneurial investing, primarily through venture capital, from pre-seed to growth stages, as it creates tomorrow's jobs and prosperity. 

Investing excessively in cash-rich companies merely sustains the status quo and fails to address tomorrow's challenges. All large asset owners, including UHNWIs and their family offices, should establish a clear and rigorous VC investment program to contribute positively and sustainably to the world. 

 

 Such a program should align with the values and beliefs of asset owners and be articulated and adhered to rigorously. It can focus on a chosen vertical or diversify, fostering entrepreneurial opportunities. 

 

Failure to take this approach amounts to inaction, and inaction equates to political complicity in the world's problems. We are here to create, not replicate the past, and this necessitates using substantial wealth as a force for good, benefiting generations to come. This is the true essence of wealth – making a lasting impact and enabling more people to share in its benefits. #Eden101

 

"From everyone who has been given much, much will be demanded; and from the one who has been entrusted with much, much more will be asked (Luke 12 48 NIV)".

 

So don’t be Ancien Régime at the wrong time 😉