Romain Lavault, General Partner at global technology investment platform Partech, shares how he is involved in piloting an initiative of the Human Technology Foundation initiative to redefine the way we invest in technology, by designing a framework geared to cultivate a stronger post-pandemic world.
Romain Lavault is unapologetically optimistic. “If I wasn’t an optimist, I wouldn’t be a venture capitalist,” he laughs.
Still, he’s very much a realist. That natural balance positions him well as a general partner at Partech, where he oversees $300 million in seed funds. It’s also about to become even more important, as he dives in to lead the development of what many consider to be the Mount Everest of the reporting world: a new means of quantifying financial and non-financial KPIs to guide technology investments.
“With tech investors right now, there’s all kinds of euphoria around returns,” Lavault says. “But are we asking ourselves the right questions?”
Lavault sees this ambitious Human Technology Foundation undertaking as a unique opportunity to build quantifiable bridges between who we are, what we value and what we achieve at work—and he says the timing is just right.
Why build this framework now?
As the pandemic surged around the world, it accelerated the pace of digital transformation and technological innovation in ways no one could have predicted. Case in point: first-time installations for Zoom’s mobile app jumped 728% in the spring of 2020. So many shifts happening simultaneously created powerful waves of change that are likely to shape the market for years to come. In fact, digital transformation market research firm IDC predicts 65% of global GDP to be digitalized by 2022, driving more than $6.8 trillion of direct investments from 2020 to 2023. As it becomes increasingly clear that the next normal looks less and less like the one we knew before, Lavault says better frameworks around tech investing are absolutely essential.
“The tech investor journey is unique in that it moves so quickly,” explains Lavault. “The questions you ask in the beginning—is this a good opportunity? Is this concept viable?—must be revisited over time as you see how users are behaving, and how the market is taking shape.”
That need is only compounded by a growing consumer, investor and regulator focus on a reimagined definition of long-term value creation. From the consumer choosing a brand at the grocery store to an institutional investor guiding a global fund, or a regulator reimagining what’s material: stakeholders are increasingly connecting choices they make with an organization’s focus on environmental, social and governance (ESG) issues.
“There’s perfect alignment between the rise of tech, and the fact that people all over now care more about the planet and each other,” Lavault says. “This search for purpose for everyone (customers, investors, employees) means we need to mix all of that into a new way to invest. It won’t revolutionize things. We may end up investing in the same way. But, we’ll be doing it with a different filter in mind. We’re changing the world, one start-up at a time.”
A new way forward calls for a new framework.
The key, of course, is in getting that filter right. Enter the Foundation’s latest work, developing a framework based on the contributions of a diverse global working group that spans industries, expertise and cultures.
For Lavault, that progress begins with a simple commitment: refuse to reinvent the wheel purely to produce another wheel no one will care about. “We want to start with everything introduced already, and layer this [framework] on top. We’re bringing in people who are already advanced in this movement. We have the right partners on board, they’re going to bring us the knowledge.”
That includes a core working group of ethicists, investment professionals, ESG specialists and tech experts. Together, they’ll map out the trending tech areas attracting the most funding attention today, and the related ethical problems those areas create. From there, the group plans to prioritize three to four key topics, and use existing frameworks as a starting point to build something new.
While different approaches exist (think UN Sustainable Development goals, the Capital Dynamics’ custom R-EYE Rating System, etc.) this new framework will seek to bridge the gaps between current options. That’s especially relevant for technology investing, which requires decision makers to go beyond understanding what a solution is being used for, to exploring the inner details of how it operates, and what adverse effects or potential biases it can create. That’s why diversity of thought underpins the working group’s composition, and focus.
“This is really about combining people who have a deep understanding of ESG and finance, experts in the field who are not investors,” says Lavault. “They can open the hood, and explain how things work.”
From there, they’ll shake the box, and see what kind of framework ultimately emerges before initiating real-world case study testing with outside tech investors not previously involved developing the framework.
“We know we’re climbing the Everest, here. [The framework] needs to be practical and useable for people like me,” Lavault says. “We need to think outside the box because this has never been done, even in terms of what kind of framework it should be. Is it an algorithm? A spreadsheet? A list of questions? We need diversity of thought around the table [to figure that out].”
His working group plans to engage investors around the world in the case study process to surface any missing pieces, and fine tune based on what they learn while applying the framework against actual deals and decisions.
Success looks like practical, useable and commonly acceptance.
How will Lavault know the Foundation’s working group has accomplished what it came to do? It’s simple, he says: “Having something very personal that I know I can use in my work. Something that can become part of my daily life. I’ll know it when I see it.”
Getting there, he acknowledges, will be complex. The initiative is slated to roll out through four rigorously defined modules, with key milestones every step of the way.
Building on his 20 years’ of experience, Lavault’s keen to introduce what they create through a three-month roadshow at the culmination of the project. If the group ultimately see other stakeholders adopting their framework, making it a standard in investing memos, they’ll know they’ve their mission was a success.
It won’t necessarily be easy. But this multidisciplinary group of leaders is ready, and above all? Like Lavault says: they’re optimists.