The great gusher of wealth created by the technology industry in the past two decades rained down on Todd Dagres in abundance, allowing him to live what he himself calls a sometimes "narcissistic" life.
The 54-year-old Boston venture capitalist — who earned more than $50 million between 1999 and 2003, including $44 million in one year alone — has had homes in Weston, Gloucester's Wingaersheek Beach, Boston's Ritz-Carlton Residences, and Mandarin Oriental, as well as Miami and Los Angeles. There was a Porsche, a BMW, the white Mercedes with the "VENCHA" license plate. He dabbled in Hollywood movie-making.
As his bank account grew, Dagres gave away money in the ways many wealthy people do: He wrote big checks to hospitals and his alma maters, helped pay for an arts center at his high school, considered establishing a foundation.
Now, dissatisfied with that kind of traditional philanthropy, he is considering a different approach to charitable giving, and it is signature Dagres — a bit brash, a dose of flash, but serious in purpose. He is organizing a "Shark Tank"-style competition that rewards the charities best able to withstand grilling by prospective investors, or "sharks." Early-stage not-for-profit organizations could pitch their missions to investors, who would vet them on their plans and fund those they consider most promising. Several big-name executives have already signed on.
The investors would also become advisers to the organizations they invest in. The goal is to bring financial stability and management expertise to emerging nonprofits that could eventually grow and benefit society. Dagres intends to be a shark himself, saying he will invest up to $100,000.
"I spent the last third to half of my life trying to make money. I was maniacally money-grubbing," says Dagres, the founder and chief executive of Spark Capital on Newbury Street and a former general partner at Battery Ventures. "But there comes a time when you get to a certain level of wealth or achievement and start looking for another area of accomplishment, and at this point, I'm looking for a category of success that goes beyond financial and into doing good work."
Dagres's plan takes a page from the playbook of so-called venture philanthropy, in which techniques from the venture capital and angel investing worlds are applied to the nonprofit sector, such as giving seed funding and business advice to entrepreneurs and rigorously vetted startup companies. It is part of a larger movement to bring market principles to charitable giving, and the trend has enthusiasts and critics.
"In the for-profit sector, there's one data point: Did you make money for me?" says David Shapiro, chairman of the board of the Massachusetts Nonprofit Network and chief executive of the Boston-based nonprofit MENTOR. "With a nonprofit, it's much more complicated to show return on investment, so what will the sharks' questions be about? The volume of people you can help or the depth to which you can change their lives?"
Despite the complicated calculus for defining nonprofit success, Dagres's idea "could get people to understand how hard and interesting and innovative nonprofits are," Shapiro adds.
Dagres, a Newbury native who did not grow up wealthy, says his idea for a nonprofit shark tank arose from a new "phase" he entered in recent years in which, having reached financial security and realizing that "joy fades quickly" after the initial thrill of shiny new possessions, he is reconsidering what it means to have a purposeful life.
He says he has learned from past mistakes in his charitable giving, much like an entrepreneur who gains wisdom from a failed startup. Several years ago, he ran a fund-raising poker tournament in which most of the $60,000 raised went to pay for the cost of the event, leaving only $17,000 for charity. Dagres, who has had a reputation for being "difficult," also tried to start a charitable foundation but gave up after becoming frustrated with advisers. Those missteps, he says, left him believing there are better ways to be philanthropic.
Dagres says he plans to continue his more traditional philanthropy but believes turning his venture capitalist's eye to the nonprofit sector could have greater charitable reach. He serves, for example, on the President's Advisory Board at Brigham and Women's Hospital and on the Boston Children's Hospital Trust Board but has come to believe his effect there is minimal.
"I'm a mouse at the Brigham; I'm a gnat at Children's," he says. "I feel good about my contributions there, and it goes to awesome causes, but it's minor compared to the amount of money those places raise."
In the for-profit world, Dagres has an enviable track record of identifying promising business ideas and helping them flourish. His home-run investments have included Akamai Technologies and Qtera Corp., the latter a $15 million bet that turned into $800 million for his investors, and his repeat success won him a place on the Forbes "Midas List" of top US venture capitalists.
Dagres acknowledges that having a keen eye for money-making ventures doesn't necessarily translate into the ability to successfully find, fund, and nurture charities.
Still, his idea has prominent backers. Confirmed sharks for Dagres's planned competition include Bob Davis, a general partner at Highland Capital Partners; Paul Sagan, an executive-in-residence at General Catalyst Partners and the former chief executive of Akamai; and New England entertainment mogul Patrick Lyons of the Lyons Group. Citi Private Bank and the law firm Gunderson Dettmer have agreed to be corporate sponsors, and a spokesman for Silicon Valley Bank says it is "strongly considering" a sponsorship.
Dagres is aiming to hold the first competition in Boston this fall and envisions spreading them around the country. Audience members could also make donations, increasing the pool of funding for competing nonprofits. If a nonprofit isn't deemed viable, it wouldn't receive money.
Kirstan Barnett, the founder of SheGives, a Boston organization that makes grants to nonprofits using a pool of money contributed by local businesswomen, says she's intrigued enough by Dagres's idea that she would consider being one of the investors.
She cautions, however, that limiting the competition to startup nonprofits overlooks the many established nonprofit organizations doing good work but lacking resources to grow.
"There are a lot of incredibly effective, high-impact, hard-working nonprofits that are small but might not fall within the category of 'startup' and could really use an influx of cash," says Barnett, a partner at the Boston hedge fund Bracebridge Capital.
Dagres says he realizes that his new project might make him ripe for caricature by those who associate him more with sports cars with vanity plates.
"I'm sure if Todd does this there will be people who criticize, but I think that's comical," says Sagan of General Catalyst Partners, who has known Dagres for nearly two decades. "Would they prefer that people didn't see the light? What's the alternative — just stay greedy and selfish? I think this is a good device to model socially conscious behavior and find and support great nonprofits."