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How Essential Capital can align venture finance with public profit
Financing innovation to address public needs can be profitable if we design the model to align incentives to achieve essential aims
Ventures building solutions for the essential challenges we face need capital. A lot of capital. While we should celebrate the tremendous inflows of capital into climate oriented venture capital (VC) funds, data from the past three decades is rather conclusive that the VC model is not optimal for substantial, essential ventures: neither cleantech, nor edtech, nor agritech, nor healthtech, nor govtech — all of the essential systems we will need to upgrade if we are to adapt and build resilience to the changes that are at our doorstep. If we truly intend to finance innovation in essential systems, we need a new logic and structure to align our investments to address public needs.
Essential Capital (EC) posits that tweaks made by new VC funds to incrementally adjust to lessons learned from past clean-tech failures won’t be able to surmount the structural reasons VC has failed to substantially advance essential ventures in the past three decades. Given the stakes of the polycrisis, it would be foolish of us to bet our house on getting different results from doing the same thing over, and over…
