Media consumption is passive. At least, that’s been the dominant paradigm for the last century or more. Under this unidirectional model, a small number of people control both production and distribution, deciding in the process whose stories are told and whose are silenced.

In recent years, however, the internet has lowered—and sometimes demolished—barriers of access, unleashing an explosion of meaningful creation, an increase in both the quantity and quality of work by amateur creatives, and an increasingly blurred line between consumer and creator.

Silicon Valley has largely failed to adapt to this emerging paradigm shift, choosing instead to continue pursuing maximum-growth-at-any-cost via the relentless commoditization of content. At the same time, existing models of impact investing in the arts have tended to follow a quasi-philanthropic model, emphasizing arts and community development, studio and performance spaces, and nonprofit arts organizations.

There’s nothing inherently wrong with either of those approaches, but at Exponential Creativity Ventures, we have a different philosophy that offers an alternative model for investors.

We’re in the midst of an historic moment for value creation in human-centered creativity platforms, thanks to the democratization of technological infrastructure and the disintermediation between artists and audiences (think YouTube, Etsy, Kickstarter, and many others). Fractured Atlas, our nonprofit parent organization, was an important player in the first wave of this trend: the DIY and indie arts movements. Its software platforms have come to provide 1.5 million artists across North America with essential back-office business infrastructure, freeing their time and energy for creative work. By leveling the industry playing field, Fractured Atlas has given independent artists and underrepresented voices opportunities to be heard.

In the continuing democratization of arts and media tech, Fractured Atlas saw both a danger and also an opportunity. The danger was in allowing those technologies’ development to be driven and guided exclusively by profit-maximizing investors whose interest in appealing to the broadest possible audiences tends to lead to the commoditization of content. Allowing that to happen threatens one of our most cherished values: that creativity and self-expression are human rights. Allowing that to happen also marginalizes minority voices, fosters dangerous echo chambers, and leads to a global homogenization of culture, expression, and representation.

The flipside of this threat, however, was an opportunity. Fractured Atlas realized that it could pull up an alternative seat at the table, one committed to supporting an ecosystem of human-centered, creativity-enabling tech; to helping the entrepreneurs and innovators who are driving the paradigm shift toward creation; and to nudging the continued progress of these technologies in an inclusive, humanistic direction. We sensed we could provide that seat while also capturing some of the extraordinary economic value being created.

So, with an initial $2 million commitment from Fractured Atlas at the start of this year, we officially launched Exponential Creativity Ventures, a $20 million evergreen fund investing in human-centered creativity platforms, global networks for developing creative voices, and the underlying frontier tech innovation that makes it all possible.

Before re-entering the creative tech space as venture capitalists, we first had to ask: Would there be sufficient deal flow to achieve both the social and financial returns we were targeting? Very quickly, we determined the answer was a resounding yes. By leveraging Fractured Atlas’s existing network, we found ourselves with an extraordinary pipeline of opportunities straight out of the gate. Within our first month, we met with hundreds of great companies in their earliest stages. The founders who came to us included accomplished artists and casual creatives alike, and we were also pleasantly surprised by the diversity of this community.

The biggest challenge we’ve faced has been in explaining our model to investors. Exponential Creativity Ventures has an unapologetic mission orientation that prompts skepticism from “pure money” investors. At the same time, our focus on technology startups and market-rate returns means we don’t fit the traditional “impact investor” mold either. This straddling of silos led to some frustrating initial conversations with potential backers.

We eventually hit our stride, however, when we launched an “Ambassador Round,” targeting small investments from arts and creative industry thought leaders and influencers. From March to July 2018, we raised $300,000 (exceeding our $250,000 target) from an extraordinary mix of people—a Broadway producer, the CEO of a leading digital arts marketing firm, the founder of Creative Capital, a Google executive, a slow food movement entrepreneur, and a music industry data scientist, to name a few. None of these individuals are traditional LPs, but they deeply understand the markets, use cases, and constituents we’re serving. They also have some context for understanding Fractured Atlas’s track record and our credibility as investors.

As an evergreen fund, we can invest and raise in parallel, and to date we have made initial investments of a combined $1,085,000 in 11 companies. More often than not, we’ve been the first institutional investors on their cap tables, positioning us to help them raise much larger amounts in later rounds. These portfolio companies are working on projects ranging from augmented reality and artificial intelligence to new musical instruments and a global market for culturally iconic indigenous art. A complete list of these exceptional companies can be found on our website.

Among our bedrock values is the belief that a healthy foundation for creativity must be maximally inclusive. To that end, we are proud to report that 70% of our investments to date have gone to founders of color and 60% have gone to women founders.

Each of these creative technologies represents the kind of impact that Exponential Creativity Ventures aims to make: lowered barriers of access, the continued democratization of creativity and tech, and financial competitiveness, both for communities of artists and creatives and for underrepresented and underestimated founders, entrepreneurs, and communities writ large.

This is an excerpt from Cornerstone Capital’s report Creativity & The Arts: An Emerging Impact Investing Theme.

Photo: ECV portfolio company Roots Studio digitizes the work and stories of traditional artists in the developing world, then licenses and produces prints, apparel, and stationery. ©Roots Studio, Inc.

Note: Certain contributors to this report may represent asset managers or specific investment opportunities. Their inclusion is not intended to be, nor should it be construed, as a recommendation or endorsement of their products or services by Cornerstone Capital Inc. The views expressed by external contributors do not necessarily reflect those of Cornerstone Capital Inc.