Elevating the frame—From ethics towards good quests in mission-driven venture

A couple of months ago, I shared a note on how mission-driven founders can stay tethered to the high purpose that sparked their vision—while building companies that retain mission integrity at scale. Since then, I’ve had some deeply engaging conversations with a few of you that have challenged me to think more expansively.

What keeps coming to mind is this: To unlock truly transformative social progress, we must go beyond the guardrails of conventional ethical frameworks. 

The Philosophy

Ethics-led approaches have been foundational to the rise of mission-driven business. But they can also be limiting. Too often, they produce companies that, while true to form and compliant to the code, are stunted in imagination, freedom, and energy that drives truly groundbreaking impact.

A better framework might begin with a different question: What level of risk is required to achieve the scale of transformation we need?”

Limitations of the Ethical Lens

Ethics-based frameworks have defined the first era of investing for social progress. Impact investing has grown rapidly—from $715 billion in AUM in 2020 to $1.7 trillion by the end of 2024. That’s a 2x jump in five years, with a 17% CAGR. And yet returns have often lagged those of traditional private equity. Why? A fundamental misunderstanding of risk.

Some specific challenges:

Mispriced risk and reward: Startups have always earned alpha by solving hard, meaningful problems of their time. We should expect superior returns from those tackling our most urgent social challenges. Yet the debate around concessionary returns—impact or return, triple bottom lines, etc.—reveals a risk model still in flux. We haven’t yet resolved true alignment between capital and opportunity.
Detached capital: When risk is misunderstood, capital often comes from misaligned investors—e.g., those who are in it to feel good, to dabble without conviction or commitment, or to exercise influence. NIMBYism is one example of this kind of detachment: progress is welcomed, just not too close to home.
Prescriptive funding: In sincere efforts to do good, many funders over-engineer solutions—directing capital to directly affect outcomes e.g., headcount diversity or job creation without thinking about systemic implications. When knowledge and power are disconnected, prescription leads to inefficient allocation of capital that reduces global return.
Bureaucratic creep: A prescriptive environment spawns process. In impact investing, this means layers of frameworks, metrics, and compliance obligations that can be overwhelming, especially for early-stage teams who are starved of resources.
Proxy thinking and system gaming: Without a GAAP-like standard for impact measurement, proxies become performance. And when that happens, gaming the system isn’t just possible—it’s rewarded. The result? We erode both mission and market performance.

Reimagining the Framework: Investing for Social Progress 2.0

At Fairbridge we are betting on a big idea that investing for social progress will be a distinct market segment of venture capital—intellectually rigorous, culturally relevant, high-performing, and scalable.

Here’s the framework we are building towards:

Pursue good quests: We pursue founders who are bold, imaginative and are pursuing good quests. We are mobilizing imagination, capital, and energy to empower these founders to pursue truly groundbreaking solutions for pressing social problems.
Promote the gift of risk: The most powerful thing capital can give is the permission to take risk. That means patient, aligned partnerships that create room to fail, recalibrate, are actively engage, and are committed to the realization of alpha in the long term.
Technology as a force multiplier: Technology is a radical tool to unlock for the reimagination of the economic design of existing business models or the creation of new ones to unlock markets for underserved markets. Our goal is to scale the ability to harness it at scale.

We invite and welcome your participation to continue to elevate our thinking and to work to advance innovation and make investing for social progress cool! 💚 💚 💚