Dominic Hofstetter (Climate-KiC) just posted a piece on Medium about the need to re-invent venture capitalism - Redesigning Venture Capital (Part I): The Challenge | by Dominic Hofstetter | In Search of Leverage | Medium
The problem he outlines is the current VC model is not well suited to address the need for systemic re-invention of our energy-material system we need. The VC system is set up to wring short term rewards from fast growing tech companies, not invent new industrial systems.
From the article:
The challenge we need to solve is to direct entrepreneurial finance in a way that promises to produce systems-transformative dynamics. Specifically, we must design an approach capable of supporting initiatives that may:
- Address no existing market and therefore cannot forecast net cash flows,
- Take more than 3–5 years to achieve scale,
- Follow non-commercial impact pathways,
- Engage the properties of complex adaptive systems (such as emergence),
- Forge unusual partnerships with the public and philanthropic sectors,
- Modify the typical management+board governance formula,
- Choose legal structures other than the limited liability company, and
- Generate value beyond what’s captured by today’s accounting standards.
How are we going to do this? We don’t know.
I’m imagining a story like Stross’ Accelerando (Max as the new VC) or Gibson’s Blue Ant / Bigend series (Bigend, but as a VC not a designer). What happens when they figure these things out? What kinds of companies do they fund and what are the returns? How do they raise their fund and manage their portfolio?
Maybe this is the evolution of today’s impact investor. Looking for some financial return, but also interested in social and environmental returns. In a future where it’s become fashionable for the wealthy investor class to make their money through impact investing, rather than ‘dirty’ investing, this might be possible.
Anyone else interested in developing the story?