Our venture fund, Core Innovation Capital, is singularly focused on investing in scalable financial technology companies that serve the American emerging market, the unbanked and underbanked. We have promised our investors (like Goldman Sachs) above market returns and we spend significant time analyzing the profit potential of each investment we make. That said, we also intend to invest in companies that will have a short- and long-term positive impact on the financial lives of the people they serve. We believe financial services have a significant role in anyone’s upward mobility, and millions of responsible, hard working Americans are stuck in a vicious cycle where their financial tools erode, instead of enhance their net worth and financial capabilities.
CFSI’s Compass Principles initiative is a bold and critical effort to set a standard for how financial services can and should function for people. It’s critical because financial services are complicated. As we can see in the marketplace and Washington, D.C., the tug and pull of organizational priorities leaves both consumers and industry with unsatisfying results (mostly consumers, if you ask me). Our partners at CFSI established the Compass Principles to set an aspirational quality standard that serves both industry and people (also known as consumers).
This is not about concessions. This is about integrity. Given the apparent lack of clarity on what consumer finance with integrity means, it’s high time to (re)establish some norms. CFSI’s process for doing this is socratic, collaborative and inclusive. Ultimately, we believe the objective should be to settle on standards that are attainable and aspirational, and that consumer finance companies sign up, make commitments and elevate the industry to world-class best practices.
My partner, Mike Harris, and I are in. We’re pre-committing (since there is no formal means by which to commit today). We’re doing this not because we expect to agree with every last item, nor because we expect to already “comply” to all standards today, but because we agree with the vision and we trust CFSI and their approach. We’re doing this because we exclusively invest in disruptive financial technology companies that we intend to set the new gold standard. Commitment isn’t just saying so in a blog post. Starting in 2012, we commit to integrate the Compass Principles into our venture fund as follows:
- To participate in the dialogue to refine the meaning of the Principles
- To use the Principles in our underwriting of new potential investments
- To ask our portfolio companies to commit to the Principles
Our intent is to tighten the specificity of our Compass Principles commitment as the Principles become more specific and as we interact with our fund’s stakeholders. And our hope is that our partnership and our portfolio companies will both lead the industry and be challenged to improve.
This was reposted from the Compass Principles blog.