Private equity is not the enemy — it’s what powers businesses to be a force for good
It should come as no surprise that 280 characters are not enough to form a well thought-out and nuanced argument.
And yet, this doesn’t seem to deter the swathes of Twitterati sensationalists from jumping on the bandwagon of “outrage culture”, calling for boycotts of companies that appear to make the slightest error — such as accepting private equity investment.
These hastily composed tweets and knee-jerk reactions are likely forgotten soon after posting. But they can cause real long-term damage to hardworking companies, many of which encompass the values that their critics claim to share.
Looking beyond the angry tweets and moral grandstanding, it is clear that there is a disconnect between “outrage culture” by impassioned users on social media and the economic reality behind the existence and growth of brands they love.
In recent years, it seems that institutional investors and private equity funds have become Public Enemy Number One for woke youngsters. A quick scan through Twitter will reveal calls to boycott a litany of unsuspecting consumer favourites, while pressuring businesses and politicians to engage in this type of “cancel culture”.
Their crime? Seeking to grow their business through a trusted source of investment.
Without institutional investors, many sustainable and socially responsible brands favoured by millennials and generation Z would never succeed in making the leap from quirky startup to successful business in a position to effect real social change.
And yet, these are precisely the investors that Twitter activists often call to boycott.
These investors provide the capital needed for businesses to grow and succeed. Indeed, if you take a look at the top 10 millennial high-growth brands, you’ll find they are collectively backed by institutional investors to the tune of £34bn — including the likes of BlackRock, Singapore state-owned investor Temasek, China’s Sailing Capital, and China Resources.
Plant-based food producer Impossible Foods, for example, which champions sustainable meat alternatives, was given a much-needed cash boost from Khosla Ventures. And e-scooter firm Bird, a pioneer of the smart travel revolution, was backed by Tusk Ventures, enabling the company to bring carbon-zero transport alternatives to cities all over the world.
This isn’t a coincidence. Institutional investors, such as private equity firms, can offer long-term patient capital, and are often uniquely placed to support high-potential companies in times of crisis.
These investors are a crucial part of our business ecosystem. I am proud of the safety nets for businesses that the current government has provided through emergency loans and other measures during the Covid-19 pandemic, but not all multinational companies have access to such support, and long-term capital from private investors can be a lifeline.
In my own personal experience, I have seen first-hand the positive impact that the financial firepower behind private equity firms can have. Blackstone, the owners of the National Exhibition Centre in my constituency, were instrumental in granting permission to convert the centre into a Nightingale hospital — even providing a £50m cash injection to ensure that it was able to continue hosting the facility.
In this time of crisis, it has never been more important to stop and take the time to consider the economic reality facing many businesses across the UK, and indeed the world at large. Institutional investors are reputable and vital sources of funding for companies seeking to grow or weather a difficult period. It is short-sighted and wrong to penalise such companies for making sensible business decisions.
The Twitterati sensationalists will have to come to terms with the reality that the investment of private capital in socially responsible brands is, in fact, a force for good. Institutional investors are the enablers of job creation which simultaneously enable businesses to scale and expand their missions of driving positive social change.
It is time to recognise that private capital is not the enemy — it is a means to change our world for the better.
Main image credit: Getty