Closing the Equity Gap: Creating Wealth and Fostering Justice in Startup Investing

A social activist and an entrepreneur remake the future of investing and business, offering a win-win road map for creating wealth and addressing inequalities by investing in groundbreaking tech companies that defy assumptions from Silicon Valley to Wall Street.

Companies backed by venture capital drive the U.S. economy, accounting for hundreds of billions of dollars in sales and profits. The problem is that most of the wealth created winds up enriching elites, while the businesses funded by venture capitalists widen economic inequality. Committed to doing things differently, tech venture capitalists Freada Kapor Klein and Mitch Kapor launched Kapor Capital to prove that investing in gap-closing startups—companies whose services or products close opportunity gaps for both communities of color and low-income communities—is good business. Over the past decade, they’ve broadened the definition of success to include profits and accountability for the impacts a business has on employees, communities, and the planet, helping to launch close to two hundred companies engaged in achieving social and economic justice while showing remarkable growth, with many valued in the hundreds of millions or billions of dollars.

Like every VC firm, Kapor Capital has experienced high-profile blowups and total losses. But its investing principles have created a stunning new ecosystem of Black and Latinx entrepreneurs, CEOs, and investors, all devising innovative, effective solutions to address the most pernicious problems afflicting many of America’s poorest communities. In Closing the Equity Gap, Freada and Mitch share their core belief that all companies must make a positive impact and that the obstacles entrepreneurs overcome in life are a far better predictor of long-term success than the schools they attend or investment dollars they raise from friends and family.

Using stories behind some of the most remarkable companies ever launched, they show that the standard investment model doesn’t work, how it can be fixed, and what the future could look like if more investors joined them.

Closing the Equity Gap provides a proven playbook for investors and entrepreneurs committed to both profit and purpose:

• The Gap-Closing Thesis: Discover why investing in startups that serve low-income communities and communities of color isn’t a concession—it’s a competitive advantage that delivers a powerful double bottom line.
• Distance Traveled Over Pedigree: Learn why the real-world obstacles an entrepreneur overcomes are a better predictor of long-term success than an Ivy League diploma or family connections.
• A New Model for Venture Capital: Go beyond theory with a practical framework for sourcing, funding, and supporting a new generation of Black and Latinx entrepreneurs who are solving society’s biggest problems.
• Real-World Case Studies: Get an inside look at the remarkable companies Kapor Capital helped launch and the hard-won lessons from both their stunning successes and high-profile failures.

Freada Kapor Klein is an entrepreneur, an activist, and a pioneer in the field of organizational culture and diversity. She is the founder of SMASH, the Summer Math and Science Honors Academy, and cofounded the Alliance Against Sexual Coercion, the first organization in the U.S. to address sexual harassment. She holds a PhD in social policy and research from the Heller School for Social Policy and Management at Brandeis University and is a member of the Obama Foundation Tech Policy Council, the UC Berkeley Board of Visitors, and a board observer of the air quality monitoring company Aclima.io.

Along with Mitch Kapor, Freada is a founding partner at Kapor Capital and cochair of the nonprofit Kapor Center in Oakland, California.

Mitch Kapor is a pioneer in the personal computing industry and an entrepreneur, an investor, and an advocate for social change. He founded Lotus Development Corporation and designed the Lotus 1-2-3 spreadsheet, cofounded the Electronic Frontier Foundation, and is the founding chair of the Mozilla Foundation, creator of the Firefox web browser. He also serves on the board of SMASH.

Along with Freada Kapor Klein, Mitch is a founding partner at Kapor Capital and cochair of the nonprofit Kapor Center in Oakland, California.