The idea of Trojan investing has become increasingly popular in recent years as investors look to use their capital to make positive changes in society. The concept first gained attention when Japanese investors bought Rockefeller Center in 1989, and has since been used to fund a range of projects, from government litigation to the development of new technologies. This article will explore the potential of Trojan investing and how it can be used to create positive change in society.
According to venture capitalist Tim Draper, who has invested in a range of projects using the Trojan investing approach, the key to successful Trojan investing is to take a balanced, whole-of-society approach. This means understanding the impact of the investments on all stakeholders, from the investors to the end users. It also means taking into account the wider societal implications of the investments, including any potential unintended consequences.
To ensure this approach is taken, Draper suggests that investors should make sure their investments are transparent and that they are actively engaging with the stakeholders involved. He also suggests that investors keep up to date with any changes in regulations or laws that could affect their investment decisions. This could include amendments to existing laws or the introduction of new laws, such as proposals to introduce legislation that would eliminate the use of end-to-end encryption.
As well as the legal and regulatory framework, investors should also consider the potential risks of the investments they are making. This includes looking at the potential for cyber-attacks or data breaches. It is becoming increasingly common for malicious actors to use ‘weaponized Trojans’ or ‘info stealers’ to gain access to company data, and investors must ensure they are aware of the potential risks and that they are taking appropriate measures to mitigate them. This could include ensuring companies are disclosing material cybersecurity risks and incidents to investors.
Another area that Draper believes is important for Trojan investing is the use of the investments to make positive changes in society. This could include investments in areas such as education, healthcare, and infrastructure. It could also include investments in areas such as the environment and social justice, such as investing in businesses that are working to reduce inequality or investing in initiatives to raise the wages of low-paid workers.
According to Draper, this approach is necessary to ensure that the investments are truly beneficial to society, rather than simply providing short-term gains for investors. He believes that this approach is essential for creating long-term, sustainable change in society.
This approach to investing is not new, and has been seen throughout history. During the Middle Kingdom in ancient Egypt, society and culture were shaped by the philosophy of Maat, which focused on social justice and the importance of balancing the interests of all stakeholders. This philosophy has been echoed in modern investments, such as the Trojan investing approach.
This approach has been gaining traction in recent years, with a poll carried out by the Association of investment Companies (AIC) finding that over half (61%) of its members are now actively investing in a range of areas that benefit society. This suggests that there is now an increasing awareness of the potential benefits of Trojan investing and that investors are looking to use their funds to make positive changes in society.
This trend is being driven in part by the growth of impact investing. Impact investing has traditionally looked at the impact of businesses and their products on society and the economy. However, it is now being used to look at the impact of investments on society more broadly, with investors looking for investments that will have a positive impact on society, rather than just providing financial returns.
The rise of impact investing and Trojan investing is also being driven by the development of new investment tools. These tools are enabling investors to take a more holistic approach to investing and to consider the potential impact of their investments on all stakeholders. This could include using tools such as ESG (environmental, social, and governance) ratings to assess the potential risks of an investment, or using artificial intelligence (AI) to analyse the potential impact of an investment on society.
The use of these tools is enabling investors to make more informed decisions about their investments and to ensure that their investments are making a positive contribution to society. This is particularly important in the current environment, where there are increasing calls from governments and regulators for investors to take a more active role in tackling social issues.
This trend is likely to continue as investors become more aware of the potential benefits of Trojan investing and continue to seek out investments that will have a positive impact on society. This could include investments in areas such as renewable energy or affordable housing, or investments in initiatives to reduce inequality and poverty.
Ultimately, the potential of Trojan investing is clear. It provides an opportunity for investors to use their capital to make positive changes in society, while still receiving financial returns. It is an approach that is becoming increasingly popular and is likely to remain so in the future.
There is still a lot of work to be done to ensure that Trojan investing is used responsibly and that it is having a positive impact on society. However, if done correctly, it could represent an investment framework for responsible risk analysis and for creating positive, long-term change in society.