The Most Accomplished “MBA” in the World

This past week culminated one of the most enjoyable and memorable projects of the year for me. Let me give you some context first.

Back in the 1980s, when I was just getting started in the computer industry and the business world, working at IBM, I was assigned to work in the extraordinarily exciting area of personal computers as it was just starting to blow up. I saw for the first time what entrepreneurship was about (there was very limited understanding of tech entrepreneurship before this), and the leaders in the field of entrepreneurship included Bill Gates (Microsoft founder), Steve Jobs (Apple founder), and Mitch Kapor (Lotus Development founder). I found it all so fascinating, but the person that I was most inspired by was Kapor because of not just his technical chops and product excellence, but also his personal values and the way he built an organization. He was my inspiration to pursue an entrepreneurial career later.

While not as well known as the others, he went on to achieve enormous success as a founder of tech companies and other related organizations, an investor, a social activist, and a community builder (he does not get enough credit for what he has done for revitalizing the Kendall Square and Oakland communities to be economically much more vibrant than they would have been otherwise, but I digress). In summary, Mitch was not just an inspiration to me but a kind of hero. While this is true, it should be noted that it did me no good when I went to him to raise money for SensAble Technologies (my second company). After I presented to him, he gave us great advice that I never forgot, but he also gave us no money. But my admiration, however, was not diminished.

So, this year, when I invited him to give the prestigious Doriot Lecture at MIT and he accepted, I joked that it might be a problem that he never graduated from MIT, where he had gone for his master’s degree from the MIT Sloan School of Management. To my surprise, he responded seriously that he was very close to graduating when he left and that he just needed two more courses to complete the requirements. Well, Mitch was not going to come back and take two classes, but he could get the equivalent credits by doing a thesis. After many iterations with the right MIT people to review options (note: MIT does definitively NOT give out honorary degrees, so this had to be earned), we settled on a thesis topic of “Impact Investing.” Working with other faculty here, I served as his thesis advisor, and I am proud to say that last week, on May 29, 2025, at the age of 74, Mitch Kapor got his master’s degree. Technically, it was not an “MBA,” as MIT did not give such degrees back when he was initially enrolled, but he did earn an MSMS (Master of Science in Management Studies), which is the equivalent.

So last week, Mitch walked and got his degree and addressed his class, and I am quite sure he was the oldest and most accomplished “MBA” graduate in the world this year. I know he and his wife, Freada Kapor Klein, were proud as it closed an open loop in his life, but I also know I was beyond proud and honored to be part of this process. It was a full circle for me as well. Life works out in magical ways sometimes. So, Mitch, welcome back formally to the MIT community, but I would argue that with your values, you have always been part of it.

Below is a summary of his very interesting thesis from NotebookLM, where I have taken out all the references and made it more accessible to the practitioner. There is also a link to the full thesis (with Mitch’s permission) for those who are interested. As mentioned above, MIT proudly and stubbornly has never had legacy admissions or honorary degrees, so even Mitch had to earn it, as you will see. Many thanks as well to the many people at MIT over the past year who helped make this amazing thing happen, including Leslie Owens, Dan Gormley, Maura Herson, Dena Patterson, Kathy Hawkes, Georgia Perakis, and Mark Gorenberg.

Understanding Gap-Closing Investing: A Practitioner’s View

Summary of Mitch Kapor’s MIT MSMS Thesis – May 2025

Gap-closing investing is presented as a distinctive model of early-stage venture capital that deliberately seeks to address systemic inequalities while aiming for strong financial returns. Developed by Dr. Freada Kapor Klein and Mitchell Kapor through Kapor Capital, this approach identifies tech startups focused on closing gaps in access, opportunity, and outcomes for low-income communities and communities of color. It integrates social impact objectives directly into the investment strategy, rather than treating impact as a secondary consideration.

The ethical roots of values-based finance can be traced back centuries through religious traditions, including Jewish principles of justice and responsibility in economic life and Protestant movements like Quakers and Methodists who established ethical restrictions on financial activities, particularly avoiding the slave trade and harmful industries. This evolved into formal Socially Responsible Investing (SRI) funds in the 1970s, driven by social movements and a desire to align investments with principles of peace, justice, and environmental care.

The term “impact investing” emerged more formally in 2007-2008 to unify approaches aimed at measurable social and environmental outcomes alongside financial returns. While SRI and early venture capital developed largely independently, gap-closing investing represents a convergence, integrating values-based goals into the private market of venture capital.

Beyond CSR and ESG: A Strategic Focus on Systemic Impact

A key distinction for practitioners is how gap-closing investing differs from Corporate Social Responsibility (CSR) and Environmental, Social, and Governance (ESG) frameworks.

• CSR is often seen as a reputational strategy, typically involving philanthropic activities separate from core business operations3031. It tends to focus on inputs like donations rather than measurable systemic change.
• ESG integrates social and environmental factors into financial analysis, primarily as a tool for managing material risks and assessing long-term sustainability for shareholders. While more rigorous than CSR, it may not explicitly address the root causes of inequality or prioritize outcomes for historically excluded populations. Measurement focuses on corporate-level metrics (e.g., emissions, board diversity).
• Gap-Closing Investing is fundamentally focused on dismantling structural barriers and generating both financial returns and social progress for underserved communities. Impact is core to the business model and investment thesis. The focus is on community-level outcomes, such as jobs created or gaps narrowed, and it views affected groups as active co-creators. It seeks to redirect capital to overlooked areas and people, arguing that structural inequality creates market inefficiencies that can be addressed by smart, mission-driven capital.

This framework argues that gap-closing uniquely centers systemic impact as a core investment goal, challenging the perception that impact investing is inherently concessionary.

Practical Application: Mitigating Structural Barriers Through Investment

Gap-closing investing views persistent structural barriers in areas like education, employment, healthcare, and access to capital not just as social problems but as market inefficiencies where value is being overlooked. Investing in companies that directly address these barriers becomes a pragmatic strategy to unlock value.

Examples from the sources illustrate this:

• In education, companies like Numerade are supported for democratizing access to high-quality STEM education for underserved communities, addressing inequities caused by unequal funding and resource disparities in schools.
• In employment, companies addressing biased hiring processes are funded. Interviewing.io is an example that uses anonymous technical interviews to ensure candidates are evaluated solely on skills, mitigating biases related to background or pedigree, and helping to expand the talent pipeline.
• In healthcare, investing in solutions like Zócalo Health, which provides culturally tailored care to the Latino community, addresses disparities in access and outcomes.

This approach recognizes that traditional systems often fail to identify talent and potential effectively, particularly among marginalized groups, and seeks to correct these failures through targeted capital allocation.

Rethinking Talent: “Distance Traveled” and Inclusive Sourcing

A core tenet of gap-closing investing is a fundamental rethinking of how talent is assessed, challenging the “myth of meritocracy” in tech and venture capital. This myth suggests success is purely based on individual merit, ignoring systemic biases and unequal access to resources and networks. Traditional VC often relies on “pedigree” – degrees from elite universities or experience at prestigious firms – which can perpetuate existing privilege and overlook highly capable founders from non-traditional backgrounds.

Gap-closing investing prioritizes “distance traveled” instead. This metric considers the hurdles and barriers an individual has overcome (e.g., poverty, racism, isolation) as indicators of resilience, determination, and unique insight. The belief is that those closest to a problem often have the deepest understanding and the motivation to build effective solutions. Founder-market fit is viewed through the lens of lived experience and “entrepreneurial outrage” – the drive stemming from personal encounters with injustice. Ruben Harris, co-founder of Career Karma, is cited as an example of a founder whose journey overcoming barriers provided the insight and drive crucial for his gap-closing business. This concept is also gaining traction in other fields like college admissions and employment, where it’s seen as a more equitable way to assess potential than traditional metrics.

A practical application of this is the explicit rejection of relying on “warm introductions”. While traditional VCs use warm intros for vetting and managing deal flow, this practice reinforces exclusionary networks and privileges the well-connected over potentially more promising, yet less connected, founders. Kapor Capital instead uses an open online submission portal, ensuring all founders are evaluated through the same preliminary process, prioritizing the merit of the idea and team based on gap-closing potential rather than network access.

Diversity as an Outcome, Driven by Approach and Team

The sources emphasize that the high degree of diversity observed among founders in Kapor Capital’s portfolio (70% across funds, increasing in recent vintages) is not the result of setting diversity quotas or prioritizing founder identity (gender, race, etc.) as an explicit selection criterion. Instead, it is a direct by-product of the gap-closing investment approach itself.

By focusing on business outcomes that close gaps for marginalized groups, Kapor Capital naturally identifies and invests in businesses often founded by individuals who have direct experience with the problems they are solving. A stark example cited is turning down a startup with Black founders developing a robot bartender (seen as gap-widening) but being open to investing in a company, regardless of founder identity, that provides fresh produce in underserved neighborhoods (seen as gap-closing). Similarly, a women-led startup targeting affluent consumers would be considered gap-widening, despite the founders’ identity.

Furthermore, a critical factor in achieving a diverse portfolio is having a diverse investment team. Diverse teams bring broader networks, increasing the likelihood of encountering founders from underrepresented backgrounds (Broadening the Top of the Funnel). They also challenge traditional “pattern recognition” in VC, bringing different lived experiences and perspectives that help recognize non-traditional signals of potential and spot overlooked value (Pattern Recognition vs. Pattern Breaking). Finally, diverse teams can help counteract inherent biases in the investment decision-making process itself, leading to a more equitable evaluation of talent and potential (Bias Reduction).

Assessing Impact and Challenging the Concessionary Myth

Gap-closing impact assessment is embedded in the investment process, focusing on whether a company meaningfully reduces disparities for target communities. It looks for businesses with built-in impact in their products or services.

Impact is assessed before investing (who benefits, is it measurable, does impact scale?) and tracked post-investment alongside financial KPIs. Metrics vary by sector but include user demographics and outcome data (e.g., wage increases, educational attainment). Qualitative stories are integrated to provide context.

This approach directly challenges the widespread belief that impact investing is inherently “concessionary” – meaning it requires sacrificing financial returns for social good. Kapor Capital’s performance is presented as evidence against this myth. Their first fund (2011 vintage) reportedly achieved top-quartile returns among early-stage venture peers when measured in 2018, with IRRs and TVPI metrics exceeding industry benchmarks. Reach Capital, another impact-focused firm, also demonstrates strong performance with successful exits, suggesting returns and impact can be mutually reinforcing, especially when addressing large, underserved markets.

The sources argue that this performance suggests that the perception of concessionary outcomes may be rooted in biases that undervalue overlooked markets and entrepreneurs. By reframing impact as a source of strategic advantage, gap-closing investing shifts the narrative and challenges the idea of a necessary trade-off between positive impact and uncompromised returns. While more studies are needed, the data available from firms like Kapor Capital provides strong reason to question the conventional wisdom.