Derek Handley discusses companies that mix capital from for-profit and philanthropic sources for social impact

Derek Handley is a social entrepreneur, philanthropist and author who recently launched Aera, a venture capital fund that invests in companies with a social mission. He co-founded Hyperfactory in 2001 and was the founding CEO of the B Team, a nonprofit leadership initiative created by Richard Branson. Handley also recently served as a Nazarian Wharton Social Innovator in Residence. In this [email protected] interview, he spoke with Katherine Klein, a Wharton management professor and vice dean of the Wharton Social Impact Initiative, on the importance of vision and what it takes to make a difference.

Why Combining For-Profit And Philanthropic Investment Can Succeed
Source: Pixabay
Combining For-Profit And Philanthropic Investment

An edited transcript of the conversation follows:

Katherine Klein: How did you find your purpose as a businessperson?

Derek Handley: I think the common pattern for me has been whenever something really terrible has happened, from a business or a life perspective, I ask bigger questions around what I might be best put here to do. In moments of crisis, a sense of perspective has often opened up new ideas about where I could be spending my time and how I could be using it. That’s one common element from the past 10, 15 years.

The other is experimenting and exploring different places, understanding that it is a journey and you kind of wave in and out of things that you resonate with. The things that I resonate with: really trusting that intuition and that instinct to follow whatever that particular calling or idea is, and giving it the space and time to really grow within my life. That’s some of the ways in which it has manifested itself.

Klein: When you were launching Hyperfactory, this purpose and larger vision for your contribution to the world was less front-and-center. But that shifted?

Handley: Right. I was mostly focused then on how do you build a startup from where I was on the bottom of the world in New Zealand and just straight out of university. I had this idea that I wanted to build a company that went global and to show as a young person that it could be done.

In a sense, the purpose that I was trying to prove was can we build companies as young kids from New Zealand and foot it with the best? It was around innovation, the thrill, the chase, how do you build a company. But when I stepped back and looked at the purpose and the impact that the company’s trying to have, that’s when I looked at a much broader perspective of what was possible. If you’re building a company, what might you try to have it tackle as an issue?

Klein: Has finding that larger purpose been inspiring? Daunting? Tiring? How would you describe it?

Handley: Whenever you’re connecting with something that you feel you’re here to do, it’s really energizing and inspiring. One of the tests I have around this stuff is, if it’s frightening in some way, then it’s probably the right place. If it’s going to be difficult and put you in an uncomfortable position, then I feel like it’s probably where I should be going. If it looks too comfortable and something that you think you could do, then it’s probably not the right thing for me.

“Whenever you’re connecting with something that you feel you’re here to do, it’s really energizing and inspiring.”

Klein: Is your purpose succinct enough that you can articulate it to us?

Handley: I don’t think that I’ve kind of created a slogan out of it. But at the macro level, everything that I’m doing now is somehow trying to contribute in some way to a social or environmental issue that is out there in the world, or some sort of injustice that I think this generation should be trying to transform, whether that’s the way we treat global drug policy or the way we think about what companies that entrepreneurs should be building.

On an individual basis, it’s about helping, and trying to empower and building confidence in every single person to pursue the truth that’s inside of them as to what they should really be doing with their life. I’ve met too many people who make a lot of compromises and don’t pursue the things they know are actually where their dreams lie for an enormous number of reasons that they have created that make it very difficult for them — whether it’s about the courage, or the confidence or practical reasons. Part of the mission we’re on is helping all sorts of people realize the things that they want to do in the world. Investing in entrepreneurs who are trying to create significant change is one expression of that.

Klein: What’s your advice to people who are trying to find their purpose?

Handley: The biggest advice I have in this whole space is taking significant amount of time to reflect and think about these kinds of questions in the course of your ordinary week or month. I think we’re in a world where people operate in a whirlwind, battling with an inbox for their whole day. It seems like it starts and ends, the blur, and then you go home and you kind of just want to get some relief. But for me the thing that’s always worked is carving out several hours a week to think about the bigger picture and always questioning, is this where I feel like I’m making the biggest difference? Is this where I feel like all my strengths are being brought to bear? If the answers are not positive for enough days in a row, then you have to make changes.

Creating that space is what I think a lot of people struggle with because they’ve just got way too much to do. But if you’re doing all the stuff and three or five or seven years later you look back at it and it doesn’t mean anything to you, then it’s far worse than taking time out now to recalibrate and challenge yourself as to whether you’re being courageous enough to really do the things that you know in your heart you should be doing.

Klein: You’ve channeled your business expertise, your love of entrepreneurship and your sense of purpose into a new venture capital fund. What is Aera VC?

Handley: Aera is a new initiative that we’ve been building over the last 15 months. It is spun out of a charitable foundation of mine in New Zealand called the Aera Foundation, aera being the word that describes our era, the things that we should be challenging and tackling.

I looked at the early-stage venture space around the world and saw that there was definitely a need for more early-stage capital and support for companies and founders who were trying to address a particular social or environmental issue that they felt strongly about. And they had chosen to build a venture-backed company to do that.

We’re looking at companies from all around the world and in the last year have backed them from New Zealand, Australia, Hong Kong, New York.

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