Ed Talk #1

YOU GET THE FUTURE YOU INVEST IN

Ed talks about how he got here.

This is the first in our series on thinkers who lead with their values. Edward Dugger III is the President of Reinventure Capital and an impact investing pioneer. He shares his experiences, the challenges and inspirations, that have led him to reinventing investing.

One afternoon during the first semester of my senior year in high school, I was summoned to the principal’s office. Rather than fearful, I was curious. My teachers had taught me rigorously, and I was a good student — number three in my class and tracking well to become a National Achievement Scholar. The same was true of my coaches. All the sweat and tears, and what often felt like physical torture and mental abuse, had a purpose: it was to be victorious. To look obstacles square in the eye and win. Varsity letters earned on football, basketball and track teams that were the envy of our town, confirmed that winning was no stranger to me. I had nothing to fear.

Yet I walked slowly to the office, also wondering what lesson I was about to learn that day. My teachers and coaches didn’t just teach from the text or playbook, they also taught the lessons of their life to guide me in mine. Among the biggest were these:

• There are rules for all of us to follow, but some won’t have to.
• There are privileges that should apply to you, but they don’t.
• You may not get everything you pay for in life, but you will certainly pay for everything you get.
• You will need to be twice as good as the white guy to achieve the same thing. But even then, it doesn’t mean you will.

Yes, these were the lessons of black teachers and coaches, who mentored black students in an all black high school, living in an all black neighborhood, existing on the edge of a white world. The unvarnished truth of their lessons was that they could teach, and I could learn everything I needed to know to be victorious in life, but opportunity was the key to it all.

With a deep breath, I entered my principal’s office. To my surprise, sitting in the office with my principal was a white guy, introduced to me as Pete Hart. A young, athletically-built man, Pete looked out of place, and he was. As Pete explained, he had come to town as a volunteer recruiter, not from Howard but from Harvard. Contrary to normal practice and on his own, he had decided to visit the black high schools in my hometown of Dayton, Ohio. Unannounced, he arrived at my school and asked to meet the top three academic students. So there I was, face-to-face with this graduate of Harvard College who had decided that opportunity should find its way across the proverbial tracks and knock on my door.

Pete changed my life. He invited my parents and me to a city wide reception. We went. He encouraged me to apply to Harvard. I did. Most importantly, Pete looked beyond the uninspiring trappings of a public high school that had never sent a student to an Ivy League school. He chose instead to be inspired by the qualities my teachers and coaches readily recognized — in a few words, a commitment to excellence and leadership demonstrated in a big way on too small a stage. He believed that the opportunity to pursue these qualities on the training ground for the elite would reveal my true potential, and he acted on that belief.

I did not disappoint. Graduating with honors from Harvard, I went on to Princeton for my graduate degree. By the age of 27, I was the president of a major venture capital firm pioneering the earliest birthing of impact venture capital investing. The Wall Street luminaries on my board, from institutions like Morgan Stanley, JP Morgan, and American Express, shared Pete’s belief.

We addressed the inequity in access to risk capital by entrepreneurs of color, a fundamental barrier to business opportunity. We did it by finding and creating quality investment opportunities, partnering with entrepreneurs who were innovators, business executives and scientists. By allowing them to demonstrate their commitment to excellence and leadership. By bringing their businesses into the mainstream and helping them build businesses that attracted over $2 billion in financing.

On the national stage,* I helped create some of the nation’s largest private and public companies controlled by entrepreneurs of color. Back home in my community of Boston, these accomplishments provided a local stage upon which to push the envelope even further. A call from a founder of a prominent private equity firm went something like this. “Ed, my friend, I’m calling as chair of the board nominating committee for ABC hospital. You know, before a few years ago we had an all Jewish board. Reluctantly, we decided it was time to bring on our first gentile.” Then, with tongue-in-cheek said, “And nothing happened! So now we’re ready to take our next step — and it’s you!” No longer an outsider (not the same as being an insider), joining this board as its first Trustee of color was one of many similar steps taken as I became deeply involved in the affairs of my community.

Tenures as a trustee of a dozen prominent not-for-profits and service on the executive committees of the Massachusetts Business Roundtable and the Federal Reserve Bank of Boston, tapped and expanded my leadership. I developed a reputation as a trusted advisor and confidant, effectively bridging the civic, political and business communities with people of color. And I used these bridges to make Boston a less tough town — for those without deep roots — to aspire, prosper and call it home.

Pete’s investment of time, interest and courage in me has paid off. By shifting the course of my life, he tilted the future just enough to have a substantial ripple effect on jobs, families, wealth and even more opportunity untold.

Whether intended or not, Pete also taught me an important lesson: You get the future you invest in. Pete decided to forego replicating only himself through his recruiting efforts and to explore the less visible areas of our society. He brought the light of academic opportunity to folks not-like-him. He acted on his values by taking a contrarian point of view. The herd of popular belief called the status quo went one way, and Pete went another.

I don’t know what Pete found as the benefit for himself, but I do know what it has been for me. Throughout my life I have been able to use the power of inclusive contrarian thinking to find and create opportunities. In my professional life as a venture investor, I have used it to look for investment opportunities where others don’t. In an industry that is often plagued by chasing the shiny technology or next billion dollar “unicorn,” I have pursued the wisdom of contrarians. I have looked to see what exceptional investment opportunities exist on the edges of just-like-them private equity networks. Particularly those among the vast underserved and overlooked pool of entrepreneurs, many of whom are people of color and women. These are people who have lived in the woodwork of our business environment, without access to capital.

With Reinventure Capital, our next generation impact venture fund, we will take a similar approach. Our investment thesis is simple. Through the application of contrarian thinking and a focus on overlooked entrepreneurial innovators, we can assemble a portfolio of investments that will produce exceptional results, both in terms of social impact and return to our investors. We believe that by creating opportunity, we will find a wealth of opportunity. We also believe the prospects we open up with our investments in sustainable business will expand jobs, share wealth, and create more prosperity. This will bring us a step closer to the future we want to have. Please join us in reinventing investing. We’ve done it before. We can do it again.

Thank you Pete.

* The photo of Ed Dugger, Senator John Kerry, and Marsh Carter, CEO of State Street Corporation, was taken at an issue-based forum at the Federal Reserve Bank of Boston.