Oakland-based venture capital firm Better Venturesrecently closed its second fund at $21 million according to cofounder and managing director Wes Selke.

The firm was originally founded as an accelerator called Hub Ventures to help social entrepreneurs running so-calledtriple bottom line startups. These companies measure their success not only by revenue and profitability, but also by their products quantified, positive social or environmental impact.

Famous examples of social ventures include outdoor gear andapparelmakers Patagonia, which promises to protect and preserve the environment, andTesla Motors which aims to accelerate the worlds transition to sustainable energy with electric vehicles and now solar products.

By 2013, after running the accelerator for three years, Selke said that he and cofounder and general partner Rick Moss decided to become more of a high engagement seed fund.That would allow them to invest higher amounts of capital into for profit, for good companies, and stick with founders for more than a few months of bootcamp-style mentorship, heexplained.

Limited partners in Better Ventures second fund are a mix of high net worth individuals, and mission-based investors. They include: Prudentials corporate social responsibility group, the Schmidt Family Foundation, Treehouse Investments, and individual VCsand tech executives including Foundrys Brad Feld, KPCBs Tina Ju, Evernote CEO Chris ONeill, and Recurrent Energy CEO Arno Harris.

Better Ventureswill typically invest between$250,000 and $400,000 in early stage companies, reserving some capital for follow-on rounds at the Series A and B stage in those startups.But what qualifies as an impact investment when so many companies talk agood game aboutchanging the world today?

Better Ventures cofounders Wes Selke and Rick Moss outside of their offices in Oakland, Calif.

Selke said:

A large number of companies claim to be good for people or the environment. And some industries are inherently good, like healthcare or education. But a lot of startups make products that will only be available to people who can afford to spend, and that could actually exasperate divides in our society. A good litmus test is to ask ifyour companysproduct or service closes an opportunity gap in society.

Better Ventures portfolio includes startupsworking on everything from cleantech, to health, HR and financial services today.Among these are: SunFunder, which helps communitiesfinance off-grid solar projects; LeadGenius, which helps un- and under-employed people find new ways to make a living; and Iris Plans which helpspatients with serious chronic illnesses to navigate a complex medical and insurance system.

More thanhalf of Better Ventures portfolio companies are based in the East Bay, mostly Oakland and Berkeley close to the firms own offices at Oaklands Impact Hub.Althoughmost recently, the firm participated in a $1 million seed round for New York City startup, WERK, which is building a marketplace of flexible work opportunities specifically for women.

Better Ventures is especially interested in backing companies that make renewable energy more affordable and accessible, or whose products serve un- and underemployed people, or those who dont have disposable income and reliable access to tech and financial services.

But a mission-based approach doesnt mean the firm is overlooking financial fundamentals.Selke said, As soon as you say impact investing a lot of people will roll their eyes and think concessionary returns. But we only invest instartups that have an opportunity to build a very exciting, scalable business.

Ourinvestment angle is that entrepreneurs are just more intrinsically motivated when theyre personally connected to a problem they are solving. When they are mission driven, they can also attract and retain top talent, people who are looking for a higher purpose in their work, which we are seeing play out in our portfolio.

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