Next Big Disruptive Venture Idea? Sustainability
“In the near future, and sooner than most anticipate, there will be a significant reallocation of capital… We believe that sustainable investing is the strongest foundation for client portfolios going forward.”
Larry Fink, CEO of BlackRock, world’s largest asset manager, in his 2020 letter to shareholders
The 2000s was the decade of the Internet. The 2010s were about AI/ML. The 2020s will be all about Sustainability. Technology will continue to propel the future. But Sustainability will define it.
But Who Will Drive This Change?
Foundations? Policymakers? Corporate houses?
Public protests and activists? A teenage tweeter out of the Nordics?
No, the real action will come from entrepreneurs who translate big dreams into successful new ventures.
Don’t We Already Have Green Ventures?
Yes, there are already many sustainability ventures. Across industries ranging from energy and e-vehicles to meat substitutes and precision crop irrigation, and many more.
Overall VC investment in the sector hit a record $16.4B during the pandemic year.
Established businesses have announced sustainability goals, initiatives, and allocated funds.
But we’re just getting started.
Sustainability Will Transform Whole Industries
Just as with the internet and AI/ML, sustainability will permeate all businesses.
We will see three categories of sustainability ventures.
- Sustainability technologies and infrastructure – The first wave of sustainability ventures will be creators of the underlying technologies. Much like technology companies did for the web and AI, these ventures will provide technologies to leverage clean energy, chemical processes to reduce waste and atmospheric carbon, substitute plastics with biodegradable inputs. We already have many such ventures today, and many more yet to come.
“We need a lot of technologies – synthetic meat, energy storage, new ways of making building materials.”
Bill Gates in a Reddit AMA
- Full-stack sustainability-first ventures – Sustainability-first ventures will disrupt and transform whole industries by making sustainability the core of an existing industry. Much like internet-first ventures such as Amazon, Uber, Netflix did previously.For example, we know packaging is an environmental nightmare. Companies are trying to reduce the amount of packaging, recycle or reuse, or switch to biodegradable materials. But staying within the overall distribution structure and processes.What if a new venture completely re-designed the whole distribution to dramatically reduce or even eliminate packaging (much like Amazon did to a storefront or Netflix to video distribution for the internet)? The new venture will promise a dramatically better customer experience and cost structure. We would have a sustainability-first full-stack venture.Consumers are ready. For instance, a study by the National Retail Federation found that 57% of consumers are willing to change their shopping habits “to help reduce negative environmental impact”.We are already starting to see businesses with sustainability — recycled ingredients, less packaging, local production — as their core proposition. Imperfect Foods, for example, finds beauty in “ugly” vegetables.
- Sustainability-Transformation for Legacy businesses – Businesses today are taking sustainability seriously – but not seriously enough.Legacy business reacted to the internet revolution by adding websites, and later mobile apps. Only later, after much new wealth creation, many companies disrupted, they understand their core had to change – to Digital Transformation. The same story is playing out again.In December 2020, the Bank of England proposed a new climate stress test, saying climate change was now a “defining factor in companies’ long-term prospects.”Sustainability will require more than ESG metrics, reducing the environmental impact of existing processes, and funding some side initiatives.
Sustainability Transformation “Redesign of a business at every level – from business processes, organization culture, product design, logistics, customer experience – to optimize for sustainability.”
It requires a Sustainability Transformation (remember, you read it here first). Expect job definitions, processes, and metrics to change for… everyone. Every business will need to look like a sustainability-first business.
Entrepreneurs will create new ventures and platforms that enable sustainability-transformation of legacy business.
Opportunities across Industries
Fortunes will be invested in and created in multiple spaces including:
- Affordable Clean Energy
- Agriculture & Food
- Packaging & Logistics
- Transport and Logistics
- Clean Water & Sanitation
- Industrial waste & pollution
The need is clear. Smart money is waiting.
We need many more entrepreneurs and ventures.
All Entrepreneurs are Heroes
They create solutions, jobs, wealth.
But sustainability entrepreneurs will be superheroes. They will literally save mankind.
So stop worrying about the next tweak on someone’s shopping or payment experience.
You have whole industries to transform and a world to save.