Happily, there are now more people looking to invest in the age-tech space, though it’s still a surprisingly small list, including Link-age Ventures, Third Act Ventures and Generator Ventures in the US, and Mediterranean Towers, Mangrove Capital (sort of) and 4GenVentures (fundraising) in Europe. This is a welcome sign of capital being convinced this market is taking off and can deliver returns. But what if ageing, in funding, like in many things, requires a different model to the norm?
The traditional VC model has been increasingly criticised for driving growth at all costs; a headlong rush for monopoly power using ‘blitzscaling’ to annihilate the competition. According to Startup Genome, 74% of internet startups fail due to ‘premature scaling’. Many VCs will suggest that they’re only interested in investing if the company can ‘return the fund’, generating $50-$100m revenues in 5-7 years and be on track for an IPO. All this sounds rather breathless and out of touch with Greta’s world that we now live in; more Wolf of Wall Street than the Wombles of Wimbledon Common (a comfortable, roly-poly version 1.0 of today’s environmental warriors).
And just as important, the rush for macho supremacy is out of touch with the kind of collaborative ecosystem building that the world needs today. When you do a word association with “Uber”, ‘collaborative’ is unlikely to be at the top of the list.
There are a number of venture firms offering this approach (including: Lighter Capital, Decathlon Capital, Earnest Capital, Founders First and Indie.vc) and broadly speaking it seems a way to get a higher chance of repaying 3x the capital invested compared to a lower chance of 10x+ Unlike bank loans the investor is incentivised to help you increase your performance (at least until they’ve got their capital returned, which is generally 2-3x) and unlike venture, the founder doesn’t give up equity or control in the mad-dash for growth. It also could apply to a variety of corporate structures, even a non-profit model.
I can see some challenges in terms of its risk – like a bank loan the whole company is at risk, though it doesn’t require personal guarantees. And it’s probably not a fit for freemium tech platforms that require up-front investment and user adoption, but that is probably the point (and there are many traditional VCs out there that will reward big growth plans).
It seems this model is well aligned with ethos of the ageing space. Would be interested to see how it resonates, any obvious challenges with the model, and which companies are the first to deploy.
