Most digital startups today are funded using the traditional model of value return. Under this system, venture capitalists (VCs) invest in hundreds of startups to find a “winner.” They don’t know who the winner will be, and only have a 1% success rate. That means that each winner needs to win big, and provide a return ideally 10-1000 times bigger than the investment. This is why they are always looking for a “unicorn,” a rare beast that will offer them riches beyond their expectations.
A startup making just a small return is not good enough, the ultimate goal is the pursuit of maximum growth. Founders and teams are put under enormous pressure to succeed on the VCs terms. The means of achieving this return or the impacts created are not important, which tends to prioritize short-term gains. (Related to: Metacrisis Series by GreenPill Podcast, Ecocultures, Data & Surveillance Capitalism)
“The primary driver of investment decision-making in the Arrest Disorder paradigm is how to profit from efficiency and optimization. This investing paradigm aims to waste less and thereby generate returns.” (Source) We see this paradigm often in B2B climate software.
Investors following the do good paradigm genuinely want to make a positive impact, and usually communicate this through lofty mission and vision statements. However, the problem with this paradigm is that someone must decide what’s good and what isn’t, creating moral superiority.
In the regenerative life paradigm of investment, investment strategies are focused on evolving the capacity, vitality and quality of local intellectual, financial, and living systems. “Ultimately, investments at this level are not defined by what is invested in, but by their success in evolving human capacity and their ability to unlock the potential of a place or system.” (Source)
An investment company using the regenerative model of investment in tech is Motherland, although they refer to themselves as an ecosystem orchestrator.