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Why the Venture Capital Model is Not the Best Way to Invest in Energy, Water, and Food

dollars growing from the ground

Delayed Response

One of the challenges with both climate change and pollution is that it’s very gradual in its impact, and any progress is very slow, like trying to move a battleship. This is one of the reasons Venture Capital in the biggest industries in the world, energy, water, and food, has been an uphill battle. I’ve been talking about addressing issues in these areas for over 20 years, but it feels like it’s only been in the last 12 months that people have been responsive and want to do something BIG.

Why It’s Easy to Ignore Climate Change

The reason people don’t talk about, say, pollution is because pollution leads to things like emphysema, and it takes years of breathing bad air to get emphysema or other lung diseases. So, when you watch the news in the US, you see the auto-accidents, the burglaries – the immediate problems where we can arrest someone – that is what the news audiences respond to.

They’re not reporting about the daily rates at which people are dying do to long exposures of air pollution. But when we have clear blue skies in Southern California, it’s hard to conceive of how many carcinogens in the air we’re actually breathing because they are invisible – same with climate change.

The effects of climate change are so slow that the reaction of most human beings is denial when the problem is super serious. If I said to you the climate problem is in this room, we’d fix it immediately. But when you say that we have a global climate problem, it’s a thorny complicated issue. Not to mention, there have been enormous financial incentives that have been promoting pollution and climate change.  On a positive note, the situation is finally changing.

Energy, Water, and Food require too much capital for Venture Capital

One of the big lessons I’ve learned from Venture Capital, to which I was originally attracted because I saw the potential for great change, is that energy, water, and food are the largest markets in the world, and you need more capital no matter where you start out in order to win. You can always lose with venture capital, but you can’t win big unless you have more capital than you think you need because these industries are so big and interrelated.

A couple of years ago, I started thinking a lot about the fact that Venture Capital itself is never going to solve the serious issues we’re facing. I felt the need to somehow get involved in big projects. However, I didn’t have enough capital personally for such large projects, so I looked upon strategic advisory services as a way to enter the large project space in a cost efficient manner. I reasoned that his was not only a good business model, but something I could handle. However, I underestimated how much business I would attract. People are now listening, and it’s very exciting. But it’s going to take a lot of work and super-enormous capital from others.

Bringing the Biggest Game-Changers Together

After about two years of avoiding of facing the reality that I will have to raise another fund, I’m realizing that it’s the reality. Unfortunately, there are so many rules regarding funds. So my strategy has been to associate myself and my new firm with game-changing individuals and investors with vast resources. And although this is exhausting for a small player, I see it as the only way.

It’s going to take the best minds, the biggest organizations, and a lot of capital in order to make real change that’s not only sustainable for the earth, but also economically sustainable. Although it’s a tall order, my goal with this new firm is to bring the biggest players together. That’s the only way this will work.

January 30, 2019

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