So far this year in the U.S. there have been over 325 children (11 years old and younger) unintentionally injured or killed by a firearm. Last year, over 200 American adults were unintentionally shot by a child using a gun, with more than 80 fatalities. There also will be more than 20,000 suicides by firearm, often by teens or young adults who use a gun owned by their parents.
These are the sorts of tragedies that I know upset a lot of venture capitalists. Not only because VCs are human, but also because I see many of the social media posts whenever one of these horrors gets widespread public attention. Very often those posts include some sort of plea for gun control―sometimes mild reform, sometimes outright repeal of the Second Amendment.
But here’s what I concluded yesterday, after our session on smart-gun technology during Fortune Brainstorm Tech: VCs are unintentionally complicit in this epidemic.
There currently are many entrepreneurs working on smart-gun technologies that could take a giant chunk out of teen suicide and unintentional firearm deaths. Some are working in fingerprint technologies, which would primarily be used by target shooters and the like. Some are working on RFID technologies, which would prevent a gun from being fired by anyone not carrying the proper token (such as in a watch or a bracelet or even inserted surgically just under the skin). Some are working on smart-grip technology, which can recognize the “proper” user.
The trouble, however, is that almost no venture capitalists have interest in funding these entrepreneurs. “It’s about investment,” said Margot Hirsch, president of The Smart Tech Challenges Foundation. “It’s very hard to create a real technology company on just grant funding.”
The preferred VC metric of TAM (total available market) is not an issue here. There are going to be around 15 million firearms sold in the U.S. this year, and surveys have shown that many buyers would purchase a smart-gun, were it to be both available and reliable (to date, no smart gun has ever been commercially available in the U.S.). Even Larry Keane, a top gun industry lobbyist, acknowledged that there could be a market ― particularly families ― were consumers confident that the weapons would work in a time of need.
In short, this should not be a political issue for either side. The rhetoric must be divorced from the reality. And, yes, that also means that the counterproductive smart-gun law in New Jersey, which caused so much trouble years ago when a relatively lousy smart-gun did almost come to market, should be reworked or repealed.
But smart gun entrepreneurs get a near-universal cold shoulder from VCs, some of whom cite regulatory risks that don’t seem to bother them when investing in Uber or Airbnb or a pharmaceutical company. Others cite fund agreements that restrict “sin” investments like weapons and tobacco, but certainly a carve-out could be created either via existing fund amendments, or future carve-outs for smart-gun technologies.
Legacy firearm manufacturers are not going to do the R&D here. Namely because they view the politics as too tricky, with many of their most loyal customers viewing smart guns as backdoor gun control (which it needn’t be). As always, real technological disruption will come from somewhere else, financed largely by venture capitalists.
Or it won’t. And more kids will die.