Social Capital Will Let Data Decide Where It Invests

The firm launched a data-focused investment platform, called “capital-as-a-service.”

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

On Monday, we talked about how SoftBank’s Masayoshi Son is capitalizing on the “information revolution” with his monster investment fund.“Those who rule data will rule the entire world,” he said. On Tuesday, MasterCard’s CEO Ajay Banga said at a conference in Saudi Arabia that “data is the new oil.” The theme continues nicely for the third day in a row after Social Capital’s launch of its new data-focused investment platform.

On Wednesday, the firm announced an operating system for early-stage investing called “capital-as-a-service.” Put simply, Social Capital will invest in startups without having to go through the process of a traditional pitch. (Which means fewer humans have to listen to pitches that start with: “Imagine a jacket, but for your legs.” Really.)

“No hoops, no $ 7 artisanal coffee chats, no designer pitch decks, no bias, no politics, no bullshit,” Ashley Carroll, the partner in charge of overseeing the project, explains in a Medium post.

Here’s how the self-serve platform works: Entrepreneurs fill out a questionnaire, submit relevant figures such as revenue and raw engagement data, and/or grant the firm access to its cloud services. Social Capital will then evaluate the company and write a check or pass and deliver feedback.

Social Capital evaluated nearly 3,000 companies during its private beta and committed to funding several dozen across 12 countries. An interesting byproduct of the data-oriented approach was that CEO demographics skewed 42% female and majority non-white. (For context, female founders received 2.19% of venture capital funding in 2016.) In an email to Term Sheet, Social Capital CEO Chamath Palihapitiya called the 42% data point “simply fucking awesome.”

It’s no surprise that the firm is taking this route. For years, Palihapitiya’s vision has been pretty clear — operational experience coupled with a focus on data. But as Social Capital begins to expand and veer toward being stage-agnostic, some people aren’t on board with the direction the firm is taking. Social Capital co-founder Mamoon Hamid abruptly departed in August to join Kleiner Perkins Caufield & Byers. The company’s third co-founder Ted Maidenberg won’t be making new investments or participating in any future funds, although he’s currently still supporting the portfolio.

In spite of the high-profile turnover, Palihapitiya seems to be hyper-focused on this data-driven approach, and he reiterated his plan to make Social Capital a full-service capital partner to the businesses it invests in throughout their lifecycles. He added:

“CaaS is designed for entrepreneurs who are either over-served or under-served by today’s venture status quo. In that first bucket: founders who prefer a low-touch, highly efficient funding process, or don’t want to give up a large chunk of ownership in their company. In the latter: founders outside Silicon Valley and the US more generally who often don’t have access to Silicon Valley-based firms, nor the networks necessary to get the right warm intro.”

Tech

Social Media Is Fueling a Scary Trend for Teen Anxiety

Instagram, Twitter, and smartphones can amplify fears and block out reality.

Experts in teenage mental health say social media is a significant factor in a rising tide of anxiety among teenagers and adolescents.

Some victims are so seized with anxiety they can’t go to school or perform basic tasks – and untold thousands more could grow up unable to cope with the complexities and challenges of everyday life, according to a comprehensive new feature on teen anxiety from the New York Times.

There’s a wealth of hard evidence: Between 1985 and 2016, the number of UCLA freshmen reporting feeling “overwhelmed” surged from 18 percent to 41 percent. Nationally, rates of “overwhelming anxiety” among college students spiked from 50 percent in 2011 to 62 percent in 2016.

Social media is just one of many factors emerging in the latest trends, with others including perfectionism and over-commitment among privileged kids, and the often all-too-real threat of violence and instability for poor and working-class teens.

But technology may be turning some of those age-old problems into more powerful fuel for teen insecurity. Apps like Instagram let teens present the rosiest possible picture (literally) to their peers, while leaving out the inevitable low points of real life. In fact, Britain’s Royal Society for Public Health recently found that Instagram was the social media platform with the worst consequences for youth mental health. One teen patient, in intensive therapy for his anxiety disorder, told the Times that he “[would] constantly be judging my self-worth online” during high school.

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The design of apps themselves can also be detrimental, particularly for those at risk for anxiety. Many apps, gadgets, and media platforms are carefully designed to manipulate our brains by hijacking pleasure centers, which young people have less ability to resist. Some neurological research indicates such systems may have long-term impacts on developing young brains.

But the Times points out that smartphones can also be detrimental when they filter out stimuli – specifically, those of the real world. One anxiety expert warns against the “illusion of control” smartphones can provide to teenagers seeking to insulate themselves. While it may help them cope in the short term, it can keep them from developing the resilience and coping skills necessary to thrive.

The atrophy of those skills, reporter Benoit Denizet-Lewis found, has left a disturbing number of teens unable to stomach even the everyday anxieties involved in going to school. One of his subjects ultimately dropped out of high school to pursue a G.E.D.

At least some experts told the Times that the solution to anxiety is to stop treating adolescents like babies – to insist that they face challenges and handle everyday tasks themselves, rather than coddling them. That ethos has been formalized in what’s known as “exposure therapy” exercises that force anxious teens to push their boundaries, and which have proven effective.

But therapy can be costly, and few parents have access to residential treatment programs like the one at the heart of the Times story. But they may find that making positive change is relatively easy when it comes to the technology part of the equation. In a recent, broader study on teen mental health and technology, researcher Jean Twenge cited potentially large benefits from limiting screen time to less than two hours a day, and letting the rest of the world in.

Tech

Online gaming may boost school scores. Social media? Not so much.

If you or your kids are avid gamers, here’s some good news: All that strategising may have a beneficial impact on school results. Whether regular Facebook use is a drag on one’s English test scores — that’s another question.

A study conducted by Alberto Posso, a professor at Australia’s RMIT University, found that teenagers who played online video games regularly were often able to improve their school scores. 

Students who were daily social media users, however, tended to under perform in maths, reading and science. “The results suggest that a student who uses online social networks on a daily basis will also obtain a grade in math that is 20 points lower than a student who never uses this type of social media,” Posso said in the report. Read more…

More about Social Media, Science, School, Online Gaming, and Australia


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