The data tells a compelling story: Benevolent Disruptors outperform traditional venture investments. They comprise more outliers, deliver stronger return multiples on invested capital, and show up more often in the best-performing venture portfolios. But they don’t always wear badges. Many fly under the radar, missing traditional ESG filters or impact labels.
It is therefore necessary to understand the defining traits of Benevolent Disruptors, distilled from industry case studies and investment heuristics, to help capital allocators spot these hidden winners.
These four signals, explored in further detail below, are as follows:
(i) They prioritize business model outcomes over optics;
(ii) They exhibit multiplier effects, not trade-offs;
(iii) They put the problem first and avoid ‘technology solutionism’; and
(iv) They solve systemic problems, generating enduring and outsized value.
The strongest companies don’t always say the right things, but they always do the right things. In a landscape saturated with ESG ratings, sustainability frameworks, and impact metrics, true value lies in outcomes, not branding.
Fund managers are often encouraged, explicitly or implicitly, to prioritize companies that fit into familiar categories, for example those which report against key ESG metrics, use the right language in their disclosures, and present a recognizable impact narrative. Yet this focus on external alignment can distort the investment process, diverting capital towards businesses that look socially responsible on paper, while overlooking those that deliver real system-level change.
Many of the businesses solving the most pressing global problems fall outside traditional ESG screens and impact narratives. They may not identify as climate or social enterprises, yet often they address negative externalities more profoundly than those that do. Their impact is embedded in the structure of their business model, not in how that model is packaged. By focusing on output, not input, Benevolent Disruption includes businesses that may solve problems — but not deliberately. Understanding this mediation effect (direct or indirect) between a business model and the externality opens up a new genre of opportunities that have long been overlooked.
Crucially, the data supports this approach. Indirect Benevolent Disruptors — those companies whose positive impact emerges not through direct positioning or as their core driver of revenue, but through the structure of their operations — generate 67% higher returns than traditional VC investments. These outsized returns are not a function of storytelling, but of real business model advantage.
Figure 13: Investment choice is critical in rationalizing portfolio selection. A First Principles or ‘Common Sense’ Approach to selecting Benevolent Disruptors into Fund Portfolios
Summary: Fund managers can surface overlooked upside by analyzing how a company’s business model mediates systemic problems – either directly or indirectly. The key is understanding whether the externality is solved as a core function of the business or as a consequence of its design. In a landscape dominated by rigid impact and ESG frameworks, discerning investors focus on structural relevance and problem-solving potential, using discretion to surface outsized value that others overlook.
The most viable businesses solving societal problems are not always the most visibly ESG-aligned. By focusing solely on the impact outcome, and ignoring all other metrics, a more accurate picture of those businesses driving positive change comes into view. Reconsidering what qualifies as a business driving systemic change is necessary. This requires applying logic rather than relying solely on sector, taxonomy, or label (section 2.ii Methodology). A company does not need to explicitly define itself as “impact” to have significant, measurable effects on the climate, on equity, or on access.
Consider Zoom. It is rarely mentioned in the context of sustainability and would almost certainly fall outside the scope of any impact or climate fund. Yet, by enabling remote work at scale, it helped reduce global business travel and aviation emissions during and after the COVID-19 pandemic. The change it enabled — how organizations work, how people commute, how infrastructure is used — has had a substantial indirect impact on energy use and emissions. Zoom is not a climate company by branding, but its operating model has generated clear climate.
Second, optics can mask deeper business model weaknesses, and, in some cases, even accelerate them. The most visible ESG businesses are not always the most viable. High-impact branding can create the illusion of strong fundamentals, even when a company’s business model is fragile underneath. When capital is allocated based on ESG visibility or narrative fit, rather than actual performance, it can push companies to raise at inflated valuations and scale before they’ve proven they can do so efficiently or sustainably. That’s the risk behind the “sustainability premium” — when demand for labeled impact assets drives prices higher, regardless of whether the fundamentals justify it. In the short term, these companies may be celebrated. In the long term, many struggle to meet expectations.
Northvolt offers a telling example. The much-celebrated Swedish battery manufacturer that aimed to accelerate the electric vehicle transition and became a public exemplar of sustainable innovation, along with others like Arrival and SunPower. On paper, it was everything an ESG-aligned investor could want. In practice, it lacked the capital efficiency, scalability, and operational resilience needed to build a long-term business. The company’s recent bankruptcy underscores a painful lesson. The product was needed, the mission was aligned, but the underlying business model did not hold. Its failure illustrates that solving a big problem is not enough if the business cannot do so at scale, with efficiency and endurance.
Viewed alongside Zoom, Northvolt highlights the disconnect between surface-level alignment and deep structural impact. The former received capital and acclaim but ultimately collapsed. The latter lacked ESG visibility yet has had broad systemic influence and continues to deliver strong financial performance. The comparison underscores a crucial point for fund managers: impact is not always where they are told to look. The most investable companies are not necessarily those with the strongest sustainability narrative, but those whose operations, by design, contribute to real-world outcomes.
Figure 14: The Benevolent Disruptor Spectrum: Hidden Value Beyond the Obvious
Summary: In a market driven by optics, Benevolent Disruptors distinguish themselves through outcomes. They create the value where it’s least obvious: by embedding solutions into scalable business models rather than signalling intent. This framework helps distinguish companies delivering real systemic outcomes from those simply optimized to look like they are.
For capital allocators, the challenge is not simply to filter for intent or optics, but to assess whether a business is solving a meaningful problem in a way that is financially viable, operationally scalable, and structurally resilient. This is why Benevolent Disruption insists on intentionality over prescription. By empowering fund managers to lead rather than follow, it allows them to find value where others are not looking among the indirect, under-the-radar Benevolent Disruptors that are structurally built to scale.
Indirect Benevolent Disruptor: Remitly
For years, financial institutions have marketed inclusion while keeping high fees, slow transfers, and exclusionary policies intact. Financial access was treated as a CSR initiative – and not a business priority. Remitly proved otherwise, redesigning remittances through business model innovation to make financial inclusion faster, more secure, and more affordable. By expanding accessibility, it unlocked an overlooked market, turning financial inclusion into a powerful engine of growth. In 2024, Remitly processed $54.6B in remittances, expanded to 7.8M customers, and generated $1.3B in revenue. Its growth was not driven by positioning, but by operational design that expands insurance access to millions of underserved customers.
”"At Remitly, we’re relentlessly focused on making the cost of sending money internationally fair and transparent, because every dollar saved is a dollar that stays in the hands of the families who need it most. Our capital-efficient model, built on trust and a per-transaction approach, ensures that as we grow, our customers benefit. We’ve shown that real impact isn’t at odds with financial success — it fuels it”
Matt OppenheimerFounder, Remitly
Direct Benevolent Disruptor: Marshmallow
Insurers have long framed fairness as a trade-off, arguing that inclusion in risk pricing comes at the expense of financial viability. Many embraced performative ESG commitments, marketing diversity and equity while leaving exclusionary underwriting untouched. Marshmallow flipped the script. By integrating AI-driven underwriting and alternative data, Marshmallow assessed drivers based on real-world driving behavior, not blunt proxies like nationality or credit history. This shift didn’t just improve underwriting accuracy; it expanded access and unlocked a vast, underserved market. In 2023, Marshmallow grew revenue by 98% year over year, reaching more than $300M. Its success wasn’t driven by messaging – it was driven by model design. In a sector known for rebranding old models under new labels, Marshmallow exemplifies how outcomes not optics, are what drive financial returns.
”"The best businesses solve systemic problems at scale. By rethinking outdated risk models, we’ve built a fairer, faster, and more scalable insurance model that proves financial inclusion and profitability go hand-in-hand”
Oliver Kent-BrahamCo-founder & Co-CEO, Marshmallow Insurance
Key takeaway for capital allocators:
The most investable companies are not always the most visible, and the most visible are not always the most viable. The companies solving meaningful problems at scale often operate without ESG labels or polished narratives. Breaking away from optics and frameworks and focusing only on whether the business model solves the negative externality, opens up a new genre of ‘Indirect Benevolent Disruptors’. Benevolent Disruption focuses on businesses that embed real impact into their business model by output, not declaration. For fund managers seeking differentiated returns and real-world impact, the challenge is not to follow narratives, but to investigate structures; to look past the surface and identify the quiet operators who are, in practice, building a more resilient system.
The most investable companies aren’t just scalable, they’re catalytic. By embedding solutions to systemic problems into commercially viable models, Benevolent Disruptors unlock supercharged incentives: powerful economic drivers activated when these problems affect multiple stakeholders.
Most companies exist on the spectrum between two extremes:
Impact actors: Companies that trade off financial returns for social impact, which are often undercapitalized and overly reliant on policy or philanthropy. For example, companies like SunPower and Northvolt aimed high on impact but buckled under capital intensity and miscalculated policy risk. Such high-profile collapses are reminders that solving a big problem isn’t enough if the business model is capital-intensive, exposed to policy volatility, or unable to scale within (venture) investment timelines.
Pure-play disruptors: Companies that chase fast growth by exploiting short-term inefficiencies, scaling rapidly but burning trust, resilience, or regulatory goodwill. For example, firms like GoPuff and Shein have scaled fast by chasing convenience and cost, but increasingly at the expense of consumer backlash, regulatory defensibility, resilience, or simply increased competition from ‘better, faster or cheaper’ alternatives—entering a race to the bottom that is hard to escape.
Benevolent Disruptors break this binary logic. They embed solutions to structural problems within commercially scalable business models, unlocking aligned incentives across customers, regulators, and partners. These companies transform societal urgency into commercial pull, attracting partners and coalitions who benefit from that systemic problem being solved, including:
Consumers: who seek better, cheaper, more ethical alternatives, especially when traditional options are failing them.
Governments and regulators: who support solutions aligned with public goals like decarbonization, inclusion, and digital access, often through subsidies, procurement, or regulation.
Communities and civil society: who see broad societal benefits – job creation, economic empowerment, environmental gains – and drive grassroots adoption or pressure for policy change.
Innovators and visionaries: who rally talent, capital, and public attention around a shared mission.
These supercharged incentives (i.e. aligned stakeholder interests) generate multiplier effects that amplify the company’s value, reach, and defensibility far beyond its core offering, generating economic and societal value simultaneously. These multiplier effects include:
Policy tailwinds: When a business helps solve a public priority (like decarbonization or inclusion), governments want it to succeed. That translates into subsidies, faster approvals, and protective regulation – advantages pure-play disruptors rarely enjoy.
Market catalysts: By solving foundational problems, they open up entirely new markets. Affordable diagnostics can catalyze digital health innovation; improved water access can accelerate advances in agriculture and insurance. In this way, Benevolent Disruptors lay the market foundations for others to build upon.
Systemic resilience: Their value extends beyond individual users, reinforcing the infrastructure they operate within. Consider how a fintech that broadens access to savings contributes to a more inclusive financial system, or a renewable energy provider helps stabilize and modernize the grid. This embedded resilience makes them trusted anchors during periods of volatility.
Because these companies strengthen the systems they operate within, they are naturally more resilient to shocks. They gain trust from stakeholders, such as governments, institutions, and consumers, who have a vested interest in their success. Their alignment with major public priorities, from the Inflation Reduction Act to the EU Green Deal, attracts additional protection, funding, and adoption when volatility hits. This creates a virtuous cycle: the more they grow, the more valuable they become to the ecosystem around them – and the harder they are to displace.
Figure 15: Benevolent disruption is about multiplier effects not trade-offs
Summary: Benevolent Disruptors operate in the top-right quadrant, where economic and societal value reinforce each other. Instead of trading one off for the other, they generate multiplier effects by embedding impact into scalable, enduring business models.
Direct Benevolent Disruptor: Octopus Energy
Octopus Energy is a clear example of a Direct Benevolent Disruptor that generates positive multiplier effects across the energy ecosystem. In a sector historically driven by short-term extraction and incremental improvements, Octopus chose to rebuild the energy system around long-term resilience and sustainability. Its $2 billion investment in offshore wind, part of a $19.4 billion long-term infrastructure plan, was not a speculative bet on subsidies or hype cycles. It was a deliberate strategy to scale the economics of the energy transition. At the center of this model is Kraken, Octopus’s proprietary AI platform, which dynamically balances supply and demand in real time. This system-level innovation enables more efficient grid management, smoother renewable integration, and better outcomes for consumers. The result is a rare alignment of incentives: lower costs, lower emissions, and long-term energy security. With $16 billion in revenue in 2024, a rapidly expanding international footprint, and market leadership as the UK’s largest energy supplier, Octopus proves that tackling entrenched negative externalities can drive both commercial scale and system-wide change.
”“At Octopus, we've always seen renewable energy as much more than a cause - it’s the future because it's superior. By leveraging technology, we've made clean energy the obvious choice for consumers by making it cheaper, not just greener. With rapid innovation at every stage of generation, storage and consumption, there are endless opportunities for better service, lower costs and totally new products and services. The result is a business model where growth and decarbonization go hand in hand”
Greg JacksonCEO, Octopus Energy
Indirect Benevolent Disruptor: Shopify
Shopify demonstrates how enabling infrastructure can drive widespread economic empowerment. Initially built as an e-commerce platform for entrepreneurs, Shopify has become a backbone for digital retail, powering over 4 million businesses globally. By lowering the barriers to starting and scaling an online business, Shopify indirectly supports financial inclusion, job creation, and economic resilience – especially for underserved SMEs and solo entrepreneurs. Its $100+ billion valuation and robust recurring revenue model speak to commercial strength, but the real multiplier lies in its ecosystem: from its integration with local logistics and payment systems to the success of third-party app developers and suppliers. Shopify turns entrepreneurship into an accessible tool for upward mobility, catalyzing new markets and redistributing value from platforms to producers.
”“I’m convinced the biggest business play of our era is tearing down the old gate-kept rules of commerce. At Shopify we’re obsessed with bulldozing every barrier so any scrappy founder, anywhere on the planet, can spin up a brand and sell to the world. Leveling the playing field for entrepreneurs isn’t just good karma - it’s rocket fuel for the global economy”
Harley FinkelsteinPresident of Shopify
Key takeaway for capital allocators:
When companies are designed to fix what’s broken in society – and can do so through commercially viable models – they unlock powerful multiplier effects throughout the systems they operate in. Alignment with regulators, relevance to consumers, and resonance with systems under stress are not trade-offs – they’re strategic advantages that compound over time.
The most successful businesses don’t start with tools; they start with urgent, persistent problems and build from there. For decades, venture capital has followed the gravitational pull of new technology. From the rise of the internet to mobile, cloud, and now artificial intelligence, each wave has brought with it the promise of transformation — and the temptation to start with the tool, not the need. This is the logic of technology solutionism: build with the latest breakthrough, then search for problems to solve.
This “tech-first” approach can often miss the most valuable and enduring innovations and lead to:
Benevolent Disruptors do something different. Rather than beginning with a technology and searching for a use case, Benevolent Disruptors begin by identifying a real-world challenge — a systemic pain point that persists over time, creates systemic cost, and erodes trust in key systems. Benevolent Disruptors don’t ask: What can we build with this new technology paradigm? They ask, What problem must we solve — and what tools will get us there? This mindset defines Benevolent Disruption: a problem-first approach grounded in real-world relevance. Benevolent Disruption looks at what’s broken, where incentives are misaligned, and where underserved users are being excluded. Only then do they choose the technological, financial, and operational tools that are best suited to solve the problem at hand. A problem that needs to be solved is a proxy for a market that remains untapped (or unsolved). This problem first/market-first approach helps investors isolate unacknowledged value sources. Furthermore, it reduces investment risk: instead of starting with a technology that may or may not have real world application, market-first innovation starts with both tailwinds and incentive systems to solve it. As such, the ‘strike-out’ rate where innovation fails to find a customer base is likely to reduce.
Figure 16: Value creation emerges where technology paradigms meet big problems
Summary: Benevolent Disruptors start with real problems present within their societal context, applying commercially viable disruptive technologies for their resolution, whereas traditional venture investors build entire portfolios focused on tech trends spurred by new platform technologies, which can be both incremental and radical in nature but tend towards a lower hit rate.
Direct Benevolent Disruptor – DeepMind
DeepMind began with a clear problem: the pace of scientific discovery was too slow. Scientific breakthroughs have historically been confined to elite institutions, well-funded labs, and research cycles that span decades. Rather than optimizing around existing tools, DeepMind tackled this systemic bottleneck directly, asking how AI could be used to accelerate discovery itself. The results reflect this problem-first approach. AlphaFold, its protein-folding model, solved a 50-year biological challenge and made over 200 million predicted structures publicly available. This dramatically reduced research timelines and has already supported 1,000+ scientific advances in fields like drug development and synthetic biology. Crucially, DeepMind’s specific focus on fundamental barriers, whether in science, mathematics, or energy, has positioned it as an enabler of discovery. With $1.9 billion in 2023 revenue and rising profitability, DeepMind illustrates that beginning with humanity’s hardest problems isn’t altruism — it’s a scalable strategy that opens new markets, reduces global inefficiencies, and generates category-defining businesses.
”“The most enduring innovations come from working closely with the communities that technology is meant to serve. At Google DeepMind, we seek input from ethicists, academics, and local populations early to create technology that prioritizes users' needs whilst addressing global challenges”
Lila IbrahimCOO, Google DeepMind
Indirect Benevolent Disruptor: Veriff
Veriff began by addressing a systemic friction point: digital identity verification in a world increasingly reliant on remote interactions. Legacy systems were siloed, fraud-prone, and created high friction for legitimate users – especially across borders. Rather than building a one-off tool for a single industry, Veriff focused on the foundational infrastructure challenge: how to establish trust and verify identities globally in a fast, secure, and scalable way. Its solution combined AI-driven fraud detection with a cross-platform verification engine that could adapt to sector-specific requirements, from fintech and mobility to gaming and e-commerce. The company now performs millions of verifications annually for clients in over 230 countries, enabling high-trust digital access at scale. By anchoring its product in the pain point of trust – not in a specific tech hype cycle – Veriff grew into a critical enabler of digital economies. Its rise shows that solving a latent, infrastructure-level challenge creates compounding value across sectors and geographies.
Key takeaway for capital allocators:
The most transformative companies don’t start with the latest technology; they start with the problems the world can no longer ignore. By beginning with the market for innovation, the systemic pain points and working backward, Benevolent Disruptors create products that meet urgent, real-world demand. Companies born from deep problems enjoy built-in traction: their markets are primed, users are motivated, and adoption moves fast.
To capture enduring value, investors must back companies solving systemic problems before capital, consensus, or policy catch up.
Clayton Christensen’s disruption theory helped explain early venture success. Christensen posits that the role of venture is to identify innovation early in the adoption cycle. By supporting companies and subsidizing innovation in the early stages it provides a route to outsized financial value when the company innovation does achieve mass-market adoption. The negative externality curve follows a similar path. By identifying negative externalities early, and investing in the solution, investors also have a path to finding outsized value. A negative externality provides a market that innovation must solve. The more profound the externality on people’s lives, the more demand there is for a solution. By following a negative externality earlier in its journey and in the solutions adoption curve (before the solution is mainstream), investors are provided with a pathway to isolating value potential.
Figure 17: Systemic challenges and the technologies addressing them align with the diffusion of innovation curve with more enduring effects than traditional innovations
Summary: Benevolent Disruptors follow a relevance-driven diffusion curve. Their adoption is not driven by novelty or convenience, but by the growing urgency of the systemic problems they address. As challenges intensify, so does adoption, accelerated by alignment with regulation, consumer demand, and participation from mainstream businesses. This process unfolds in three stages: limited early action, growing resistance and market readiness, and finally, widespread adoption as solving the problem becomes unignorable.
Benevolent Disruptors create value by building foundational solutions to persistent externalities that undermine resilience, trust, and long-term systems integrity — and they do so before consensus forms around them. The adoption curve tends to unfold in three stages (as illustrated in Figure 17), each rooted in the scale and persistence of the problem they aim to solve, and the lasting value they unlock.
Many of the world’s most successful companies demonstrate the financial value of solving problems early. Companies that have placed early, high-friction bets that addressed systemic externalities long before consensus formed. To address healthcare vulnerabilities, Moderna invested early in mRNA platform technology, a capital-intensive, high-risk approach with little near-term payoff. But when COVID-19 hit, that platform enabled one of the fastest vaccine rollouts in history. To address emission-intensive transport, Tesla built out the electric vehicle supply chain amid deep regulatory and market skepticism. To address financial exclusion, Stripe turned digital payments into infrastructure, making financial tools accessible to small businesses and creators globally, while traditional banks remained fragmented and slow to adapt in the wake of the Global Financial Crisis.
These firms faced resistance, regulatory pressure, and market doubt. But they persisted, aligning their growth with long-run externalities: decarbonization, health resilience, and financial access. Their dominance reflects the Benevolent Disruption arc: identifying persistent friction, gaining momentum through aligned consumer and policy shifts, and ultimately redefining market baselines. By solving continuously solving early for problems others ignore and adapting their models as technologies evolved, Benevolent Disruptors ultimately become the infrastructure much of the economy now relies on.
Benevolent Disruption shows us where to look now: at the world’s most persistent externalities. Enduring value is created not by cheaper tech, but by building systems people can rely on, especially as externalities become central to both regulation and consumer behavior. The sooner a company starts solving, the more of the upside it captures.
Direct Benevolent Disruptor: Vinted
To address the mounting externalities of fast fashion, from overflowing landfills to carbon-intensive production, Vinted quietly built a circular economy engine long before resale was trendy. Founded in 2008 in Vilnius, Lithuania, by Milda Mitkute and Justas Janauskas, the platform began as a grassroots solution to a common pain point: closets full of unworn clothes. But behind that simple use case lay a deeper systemic bet: linear consumption in fashion was both environmentally unsustainable and costly for the consumer. Its peer-to-peer model removed friction from secondhand sales, investing early in trust systems, payment integration, and localized logistics. Long before “circularity” entered ESG reports or EU regulatory frameworks, Vinted was solving for fashion’s hidden costs: overproduction, waste, and consumer disempowerment. With over 80 million users today, Vinted underscores a core principle of Benevolent Disruption: the most enduring companies don’t wait for policy or public opinion to catch up. They identify negative externalities early, solve with integrity and scale, and are rewarded when the world inevitably shifts in their direction.
”“At Vinted, we’re making the change to second-hand. Second-hand is better than new, for the climate, and for your wallet. We've already helped tens of millions across Europe discover how easy it is to buy and sell second-hand fashion, and we’re just getting started. We’re now moving into electronics, furniture and more — and are building our own shipping and payments infrastructure to make second-hand as easy, safe and convenient as new”
Thomas PlantegaCEO, Vinted Group
Key takeaway for capital allocators:
For investors, the clearest path to resilience and long-term value lies in backing companies that solve problems early: turning pain points into essential infrastructure, and systemic risk into scalable, enduring returns.