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A former technical adviser to Bill Gates explains why his new venture firm will only invest in 'ethical' startup founders whose every action 'would be okay if it appeared in the newspaper' (MSFT)

Greatscale Ventures

  • An ex-Microsoft general manager and technical adviser to Bill Gates launched a new venture firm to fund "ethical" startup founders whose every action "would be okay if it appeared in the newspaper."
  • Aaron Contorer and Tyson McDowell co-founded San Diego-based Greatscale Ventures to fund early-stage companies who adhere to the firm's ethical principals, including protecting customers' data privacy. The firm's first fund is $60 million.
  • An "ethical" fund doesn't necessarily mean going after companies with an altruistic business model, but making sure they are run transparently and don't misbehave in order to make money.
  • The investments are small, but Greatscale also provides more active support to portfolio companies in the form of professional services and even in scouting executives, such as if the company needs a chief technology officer. 
  • Contorer – who worked for Microsoft during the 1990s and said he spent "hundreds of hours" with Gates as his technical adviser said the firm was inspired by Gates and Microsoft.
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A former Microsoft general manager and technical adviser to Bill Gates launched a new venture firm to fund "ethical" startup founders whose every action "would be okay if it appeared in the newspaper." 

Aaron Contorer, who worked for Microsoft throughout the 1990s, cofounded Greatscale Ventures with venture capitalist Tyson McDowell to fund early-stage companies who adhere to the firm's ethical principles, including protecting customers' data privacy.

"People think there's an ethics crisis in the tech industry today," Contorer said. "They're not comfortable with it at all and don't seem to want to have DNA testing or automate different parts of their personal life because they are saying, 'What's going to happen to the data?"

An "ethical" fund doesn't necessarily mean going after companies with an altruistic business model, but making sure they are run transparently and don't misbehave in order to make money. There's a business case for this, too, he said. A strong reputation among users helps grow customers and maximize the return for investors.

"We focus on making sure companies are properly run," he said. "Everything they do would be okay if it appeared in the newspaper."

The firm has now raised its first $60 million fund. Its model is to get in early and be the first investor in startups, "with a very modest check but an enormous amount of support," he said. Greatscale, for example, recently invested $1 million into a startup called Fulcrum that help companies find independent contractors and independent contractors find work.

The investments are small in the grand scheme of things, but Greatscale also provides support to portfolio companies in the form of professional services resources and even assistance in scouting executives, such as if the company needs a chief technology officer. Traditional venture firms provide funding and usually take a board seat to provide strategic guidance.

Inspired by Bill Gates and Microsoft

Contorer said the firm was inspired by Gates and his work at Microsoft. He worked for Microsoft during the 1990s and said he spent "hundreds of hours" with Gates as his technical adviser. 

During his time as CEO, Gates employed a technical assistant to chase down issues he couldn't get to personally, basically adding to Gates' day. Contorer's office shared a wall with that of Gates, and he would accompany the CEO to meetings and follow up on issues on the then-CEO's behalf.

Microsoft has worked to establish itself as a leader in tech industry ethics, including advocating for the responsible use of artificial intelligence. Microsoft recently ranked among the 10 most-reputable companies in the technology industry in a report from the reputation-measurement firm Reputation Institute.

The company also published in December six principles to guide its facial recognition work and this month hired former Attorney General Eric Holder to investigate whether one of the startups its venture capital arm invested in violated those principles.

Got a tip? Contact this reporter via email at astewart@businessinsider.com, message her on Twitter @ashannstew or send her a secure message through Signal at 425-344-8242. 

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