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Simon Sinek was right – start with why. At the time of writing Integrated Investing, I felt very strongly about a core concept of Integrated Investing, which I called “Access to Essential Resources” and the book opens with this. Chapter 2, however, encourages readers to think about why we invest in the first place. I think it would have made sense to start with why.

Understanding “why” an investor would put their capital, resources, time, and energy towards something with an uncertain, future outcome is important for understanding what is driving their decisions, what motivates them, how they think, and what they want. In general, “why” is what we can turn to, to guide our decisions when faced with new or new-to-us situations. But before we get into the “why”, let’s talk about the “who”.

“Investor” is not a monolith

In recent months, I’ve become more nuanced about how I describe investors and am careful not to think of investors as a monolith. I don’t think I ever did – in fact, I realize how different groups of investors are when, after raising the first Pique Fund (from individual investors with investment sizes ranging from $5,000 to $50,000), I attempted to raise a second fund from a completely different group of investors (very high net worth individuals that could invest $250,000 into a single opportunity and institutional investors investing $1 million and more).

What someone with $20,000 to invest in their lifetime wants from an investment is likely different from what someone with $20,000 to invest annually wants. What motivates someone with $200,000 to invest is probably different from what motivates someone with $1 million. Different still is someone with $2 million to invest or someone with $25 million.

Start with why

Chapter 2: Why We Invest, included a list (who doesn’t love a good list) of 11 objectives that might motivate an investor:

  1. Status
  2. Power
  3. Leadership
  4. Connection
  5. Security
  6. Future consumption
  7. Preparation for obsolescence
  8. Innovation
  9. Legacy
  10. Making decisions
  11. Exchange

Testing the list

This list of motivations was inspired by a 2008 talk by Dougald Hine on five purposes of money. I expanded the list for the purposes of investing based on what I’ve experienced and observed in practice, working with investors. To add scientific robustness or rigour to this list, something I’d do additionally is to survey investors about their motivations for investing and what they believe is the purpose of investing. With a large enough sample size, I could observe the patterns and group the responses, thereby testing my hypothesis about the 11 purposes of investing.

Capital as a battery

Referencing the six categories of Essential Resources, some of the things on the above-mentioned list of reasons why we invest, namely Security, Future consumption, Preparation for obsolescence, and Innovation, would fall under the category of “Essential resources for managing change”. In the book I also included Legacy under “managing change”. Whilst there is some truth to accumulating capital to be able to pass it along so that future generations are better equipped to manage change, what I didn’t address was the impacts of generational wealth on our society and economies and how generational wealth continues to grow whilst wealth inequality widens.

I strongly believe that capital itself should serve a purpose and shouldn’t be accumulated just for the sake of accumulation, especially when 40% of the global population does not have access to sufficient clean water, when in 2020, between 720 and 811 million people faced hunger, when in 2019, 774 million people did not have access to electricity, and when 1.6 billion people worldwide live in inadequate housing conditions. This only scratches the surface when it comes to the unequal access to essential resources experienced around the world.

Capital is an essential resource for managing change. Generally speaking people with capital were able to manage through the global COVID19 pandemic. Capital enables us to have parental leave. Capital gives us the space to heal from illness.

Capital is useful and I often think of it as a battery – something that we can draw upon, to get us access to the resources we need particularly when we cannot exchange our time and labour for money (such as in old age, when we’re ill, when we have unpaid caregiving responsibilities, or even by choice if we’re trying to escape a bad or violent situation).

Capital as power

Power was not something I grew up talking about, observing, analyzing, nor influencing. The first time I heard it talked about in the context of my work was around 2012, by Joy Anderson at Criterion Institute at one of their Convergence events. And even then, I’d shy away from talking about power and its relationship to capital and investing. But I didn’t shy away from writing this in Integrated Investing: “Impact investing should be about shifting power over resources and the access to them so that power and resources are more equally distributed, but this is not always the case.” 

Power and control over capital – the ability, authority, and discretion to direct how it is spent – affect who gets access to capital, the terms, conditions, rights, obligations, and strings attached to capital, how it may be used, and for how long. Power shows up when capital transfers hands or when the access to capital is conditional upon returning it (and then some) in the future. Power shows up when there is a time limit on or criteria for how it may be used. 

The more capital you have, the more leverage you can get. You can leverage your own time and capital by hiring or investing in others to act. It’s the closest thing to cloning yourself. I am still a student of understanding power and particularly of understanding ways of alternative forms of power and counterbalancing the power that comes from having disproportionately more capital than others.

Different roles investors can take

As a consequence of the differences in privilege, status, and access to resources, investors can and must take different roles.

  • For some people, investing is an opportunity for people to grow their “capital as a battery”.
  • For people who already have a big enough battery, investing can kickstart regenerative, rather than extractive business and economic models. Don’t worry, you will still have enough access to capital for your own battery!