Lately, I have been spending a lot of time understanding the technological impact on the human race (heard of humane tech?), policy impact on society (how social finance is creating better policy interventions?), ecosystem development impact on creating a market, and impact of communities/tribes to bring social and behavioral change. Hence, I thought of putting my thoughts on the linkages between ecosystem development, venture Investing, and venture building.
I am neither an economist nor policy major, though while working with Gray Matters Capital, it gave me a good amount of exposure to ecosystem development. This is where I started ecosystem work, focused on improving the quality of education.
I am extremely lucky that I got exposure to ecosystem work, all thanks to Smita Sircar who previously worked on inclusive banking in South Africa and has deep expertise in social innovation. I was also able to spend a lot of time with my mentor, Bhanu Potta, founder of Zinger Labs, an advisory consulting firm focusing on tech for good, who strongly believes in the power of co-creation, community building, and ecosystem development.
Smita and I kickstarted an ecosystem development work in India in the K-12 sector with a sole purpose to help the affordable private school ecosystem mature in India by bringing various stakeholders together like impact funds, foundations, ed-tech ventures (for-profit and not-for-profits) and corporates (CSR). Though I was involved only in the initial period of 9-12 months, and then later moved into the investment side, it still gave me a great foundation. This later helped me in devising an impact-investment thesis by determining the right kind of gaps existing in the Indian education system (across the value chain), and all the fillers which private ventures can fill at scale.
Why Ecosystem Development?
Apart from working on the ecosystem development piece directly, these fours books have helped me shape my understanding of the holistic approach to “profit with purpose” or “conscious” venture investing →
- Purpose Capital by Jed Emerson
- Collaborative Capitalism and the Rise of Impact Investing by Jed Emmerson
- On Impact – A Guide to Impact Revolution by Ronald Cohen
- How Markets fail? By John Cassidy
It’s very important to see ecosystem work as an integral piece of any early-stage venture fund, as most of the time venture funds focus on investing in cutting edge technologies or ventures serving a new market, which might be underserved or unserved.
Ecosystem Development is about working towards a stronger market approach by maybe creating self-regulatory bodies, etc. this can be useful at places where the govt. regulations are already tight or might get tightened in the future, it provides a safety net for the players to rely on and their voices to be heard, as well as this kind of a platform, serves to create access to the market for the portfolio ventures by bringing in awareness.
Examples, where I see this kind of ecosystem, can play an important and transformational role:
- Financial Inclusion, as we know in spite of demonetization and government initiatives like “Jan Dhan Yojna” in India, we still have a large population that has no formal access to credit, low investment in saving securities and extremely low in terms of insurance penetration. On the one hand, we have Indian unicorns like PayTm, Mobikwik, Razorpay, BharatPe, PhonePe, etc. On the other hand, international unicorns like Tala, Branch, Stripe, etc, trying to enter the Indian ecosystem. In spite of such a vibrant fin-tech ecosystem, we still don’t have one uniform voice to represent the payment/fin-tech/insure-tech ventures to regulatory bodies or even help regulatory bodies up to date with technologies, customer security, privacy, and grievances. iSpirit and Digital India Collective for Empowerment (DICE) have been doing some fantastic work, especially in the financial inclusion space.
- I had a recent conversation with the founder and investor of Beyond Animal, Claire Smith, who invests in early-stage ventures building cutting-edge plant-based products. Apart from investments, their work also revolves a lot around policy, advocacy and ecosystem development because the market for plant-based foods is still in nascent stages and the awareness of these products in the market is low. Hence, they came up with a platform called Beyond Animal, which serves a purpose for advocacy, awareness among the consumers and provides rapid prototyping, feedback, and access to the market to the portfolio companies.
There can be several areas where ecosystem development does not only help in creating access to the market but also in shaping policy, awareness-creation, and driving impact at scale. It’s extremely important to learn from nature while being an ecosystem builder because any small change in the system can affect it positively or negatively, so we need to be conscious of our actions as an ecosystem builder.
We need more ecosystem builders in building new ventures, using technologies like blockchain, building communities as well as impact and venture to invest, as it helps shape the ecosystem by acting as system engineers and community builders. They are an integral part of the solution making and hence can drive a positive vision for this world.
It’s very important for us to learn and derive inspiration from Wolves so that we can become better as ecosystem builders and change agents to bring a long-lasting impact in this world. It’s a classic example of learning from nature and mimicking it in our systems or bio-mimicking.
Wolves are in true sense ecosystem builders:“The Wolves changed the behavior of the rivers. They began to meander less. There was less soil erosion. The channels narrowed. More pools formed. More riffle sections. All of which were great for wildlife habitats. The rives change in response to the wolves. And the reason was that the regenerating forests stabilized the banks so that they collapsed less often. So the rivers became more fixed in their course……… So the wolves, in small number, transformed not just the ecosystem of Yellowstone National Park – This huge area of land….. But also, its physical geography.” ~ How Wolves Change RIvers
For the full version of the documentary, please refer to this link.
There is another resource that we can derive a lot of inspiration from is by Starre Vartan, what can wolf packs teach us about being better humans?
“Ultimately, wolves benefit humans by maintaining balanced, healthy ecosystems.”
We need more ecosystem builders in impact and venture investing, as it helps shape the ecosystem by acting as system engineers and community builders. They are an integral part of the solution making and hence can drive a positive vision for this world.
- Investing in early-stage ventures as well as high-quality entrepreneurs
- Solving immediate development problems in Indonesia via building ventures
- Ecosystem building more broadly (advocacy, structures, policy, etc.)
If you are an ecosystem builder, I would love to hear from you on this.