4 min read
The world reels from the shocks of pandemic, natural disasters and political instability.
Economic growth has been challenged. Established structures of investment and spending are being dislocated. Emerging social needs demand urgent response.
Gaping holes are being torn in existing safety nets, livelihoods, and financial structures for every sector – regionally and globally. Inequality and exclusion have been exposed across and between populations, communities, and industries. The institutions that anchor our society are showing alarming signs of wear and tear.
While past decades have seen periods of tumultuous change, today’s situation suggests society-wide disruption, now magnified by the open-ended impacts of COVID-19.
Contagion and connection – of every kind – are central to the context we face. Health emergencies are infecting economies. Ecological crises and environmental impacts are threatening human security. Social inclusion is challenging political stability.
It has become commonplace to suggest that our current predicament demands ‘innovation’: new ideas, new technologies, new ventures. The startup frenzy has become part of national and international thinking about ‘what our economy needs’. The heroic entrepreneur and lone-wolf innovator are sought out for solutions – from health to aged care, education to finance, social equity to energy supply.
But: if innovation – of one kind or another – is to be central to our economic and social future, are our models of financing and supporting that innovation fit for purpose?
Across this space, several approaches are grappling with the challenges:
- conventional venture capital,
- ‘impact funding’ – from equity investments to social impact bonds,
- public sector procurement,
- private philanthropy.
But are they enough?
The need for a new model: introducing ‘progressive venture capital’ In many ways, our traditional models of innovation funding are showing their age, and their partiality. Often failing to create long-term, social impact with sustainable economic returns, our conventional models risk being inadequate to the task we currently face.
We need to adapt our existing venture and innovation funding models to today’s predicament. We need to marry scaleable impact with a robust approach to generating returns. We need a model that can mould investment and risk capital more directly around the pathways and value points traversed by high-growth, impact- driven innovative concepts and ventures as they develop. And we need a method for catalysing ventures, for mitigating risk and for creating value.
Put another way, we need progressive venture capital. Uniting an approach of early-stage innovation development, and a method of catalysing and leveraging ecosystems and networks, progressive venture capital is ‘progressive’ in two senses:
- It is geared to helping specific, breakthrough interventions and ventures progress: progressive venture capital is developmental in focus, aiming to strengthen, speed and amplify innovative activity and ventures to make an impact in health, education, human wellbeing and social value.
- It helps our economies and our societies to progress: progressive venture capital is interested in shifting patterns of inclusion and participation, seeking a more open access to capital and a better distribution of value over time.
Progressive venture capital works to put finance in its proper relation to the real economy – facilitating, rather than dictating to productive, innovative, value-creating activity. But it also properly relates financial and impact outcomes: reorienting impact as the pathway and source of – rather than the counterbalance to – financial returns. Put another way – it is possible to produce outstanding human impact, while generating superior financial returns.
Progressive venture capital’s method is also radically inclusive and connected. By drawing together players and capabilities that contribute to building successful innovative ventures – from accelerators to researchers, governments to corporates, community partners, capital networks and technologists – this method can lead to powerful results in in the form of de-risked initiatives, more robust, faster venture creation, and clearer pathways to scale.
And so, progressive venture capital is far more than just money. Rather, it is a function that curates a network of innovation development to source, de-risk, road-harden and catalyse the development of specific initiatives, opportunities and investments. In a sense, it merges the activism of an angel investor, the scale and rigor of venture capital, with an aspiration for socio-economic change.
Join the conversation
The opportunity is vast – financial capital is under-used, human needs are compelling and obvious: economic, security and global health emergencies demand new approaches. We need scaleable investment vehicles for human development, wellbeing and social progress in a newly constrained world.
Along with these uncertainties and opportunities come risks. Investors with a commitment to long term societal wellbeing need strategies that will simultaneously pursue impact and mitigate risk.Such strategies would drive a maturity cycle for innovations over a medium-term time horizon – drawing together a dynamic ecosystem, to maximise the probabilities of success. This synthesis of purpose, scale and scope is key to realising sustained return, during a time of ongoing disruption.
Our view is that great impact can be achieved and sustained with a strategy that combines:
- the rigor and structure of conventional venture capital approaches
- a refined focus on purpose, inspired by the social impact domain
- a broadening of investment scope and scale through more inclusive and ‘developmental’ innovation financing.
AVPN invites you to join the conversation in respect of today’s most pressing human and economic issues – and what capital can do about them. With partners Synthesis Capital, the MedTech Actuator – Australia’s national medtech catalyst organisation (now with operations in Singapore and across the region), the Menzies Foundation and Brightlight Impact Advisers, join us for a discussion about the models and interventions that can change the world of wellbeing – and how you can be part of it.
