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Young Billionaires Seek VC Investing That Improves the World -- and Turns a Profit


At this weekend's Nexus Global Youth Summit, a gathering of uber-wealthy men and women under age 40, the focus was on social entrepreneurship.

MINYANVILLE ORIGINAL Zac Russell grew up in a family that knows a thing or two about investing. The company founded by his grandfather, George Russell, Jr., is a vast financial services company known to many for its Russell 2000 Stock Index (INDEXRUSSELL:RUT).

But it wasn't until the Russell Investments heir was 12 years old that his life changed in a big way. That's when his parents decided to sell the family business. "It was like winning the lottery," he says.

Russell is one of the advisers to the Nexus Global Youth Summit, the crème de la crème gathering of heirs and heiresses to the world's greatest fortunes. The conference, which just wrapped up this past weekend at New York University, boasts names that are recognizable to the public – Rockefeller, Kluge, Auchincloss, Bronfman, the Princess Aga Khan, and a handful of princes from the House of Saud.

Some of the public companies at which these families made their fortunes are no longer connected directly to the families and heirs. But their legacies are considerable: Exxon Mobil (NYSE:XOM), founded as Standard Oil by the Rockefellers; Vivendi (EPA:VIV), which owns the Seagram Co. long controlled by the Bronfmans, and Metromedia, which the Kluges sold to News Corp. (Nasdaq:NWS).

Another facet of the Nexus crowd consists of self-made entrepreneurs who are in many cases just as rich but less well-known outside rarified social circles. The one thing Nexus attendees have in common – besides vast wealth, of course – is that they're all under 40 and determined to use their inheritance to make the world a better place. Founder Jonah Wittkamper, who founded two Internet start-ups when he was barely out of college, is a leading voice on corporate social responsibility.

Then there's Ken Howery, the co-founder and managing partner of Founders Fund. His San Francisco-based firm is the first venture capital fund to focus solely on the founders of promising start-ups. It might sound like a bit of a gamble in the VC space, but Howery co-founded Pay Pal and sold it to eBay (NASDAQ:EBAY) for a cool $1.5 billion. So he's confident he can find the next version of himself.

"A lot of people think that if you have family wealth, the only things you can do are either invest in public companies or give to non-profit foundations," said Howery during a presentation entitled 'Finding Your Investment Voice.' "But with venture capital you can give back to the world while making money."

One of Howery's latest investments at the Founders Fund is a Web-based service that's essentially an Open Table for doctors. By helping fill up available space on a doctor's schedule, more people are receiving health care, he said.

One of the youngest participants at the Nexus Summit, now in its second year, is Chelsea Mehra, who was the first female president of her high school Milton Academy's investment club during the 2010-11 school year. After graduation, she founded the Invest in Girls foundation to help attract more females into the financial services industry. "Value investing – what I do – is all about accountability," she says.

Another Nexus attendee is Firoz Ladak, the executive director of the Edmond de Rothschild Foundation. He told participants about his foundation's philosophy on investing in social entrepreneurship, one of the hottest trends in the foundation space. "Inherently it needs to be tied to financial viability," said Ladak. "Because you need to create a sustainable entity that will eventually stop depending on your foundation. At a certain point you need to know when and how to exit."

Inheriting hundreds of millions of dollars virtually overnight is something most people wouldn't exactly have a problem with. But it wasn't all fun in the sun for Zac Russell, who took on responsibilities commensurate with his enormous net worth. Whereas some of his wealthy friends were content to travel the world and have fun, Russell spent the five years after college graduation attending "next generation" philanthropy and investment conferences – not exactly the most exciting pursuit for a guy in his mid-20s.

No doubt about it – the Nexus crowd is as serious as a bunch of under-40s can get. But they manage to have fun at their conference as well. Each night of the conference, attendees proved that they work hard and play hard by partying in some of New York City's hottest clubs.

Perhaps the most memorable moment of the summit was when Kevin Salwen, author of The Power of Half (Houghton Mifflin Harcourt), told the crowd that he sold his multimillion-dollar Atlanta home and gave half the money to charity. "My wife and I were self-absorbed, consuming Yuppies," he said. "Up until that point we knew how to invest money, but not in a way to bring about social change."
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