What is a Sustainable Venture?
Being in the Venture Capital industry for over 25 years, I can remember hearing the pitches of many companies in diverse sectors such as Communications, Semiconductors, Software, and Hardware Systems which were all claiming to be “sustainable”. It always had implied a definition of longevity based on revenue and profit growth over time, due to good execution of a business model that satisfied the customers needs over time.
This is now an insufficient definition. The word sustainable now incorporates a worldly view. Are you making mankind and the environment better off then when you started? Is this new venture one with a vision of profit and regenerative to the world. Is the true cost of the model incorporated in the operating costs of the business.
Most existing business don’t have any provisions for this. They were formed before these notions were considered and still many are being formed without consideration for the true costs and benefits for the world.
A new type of corporate structure called a B-Corp is now becoming one of the models for the future of corporations. Guidelines of how to operate better with an ethos that is compelling all while potentially saving or making more money.
Generation Investment Management is investing in public and private companies using positive screens on best operating practices for the long term benefit on multiple fronts in almost any sector and its results show this works.
Yet Jed Emerson, a long time authority of Mission Related Investing (MRI) just wrote a wonderful paper on the challenges and limitations of sustainable investing today. The paper “Beyond Good vs. Evil” concludes that ” if we hope to achieve the long term vision shared by many—a vision of sustainability and integrity within those same global capital markets—we have no choice but to challenge our thinking, to move beyond a small community of like minded actors to a larger, diverse community of investors, stakeholders and asset owners.”
Change will happen, it has to happen. We need to realize the need for new models is more pressing then ever and existing companies do not change fast enough. This is why new ventures are always being born. Some as in Clean Tech require huge amounts of equity capital and government help which will challenge the notion of viability as apposed to sustainability. Then there are new businesses that are challenging the norm and unique in business models built from ground up, but will require help in strategy, structuring, scaling and eventual access to the capital markets for that scaling. Firms like Equilibrium Capital are helping this next generation of sustainable companies build up and scale.
We need to help fund and build companies that have an impact to the status quo. That are change agents. That can make a difference and scale. The opportunity is huge the outcome potentially enormous.
