Circular Economics & Venture Investing

OK, let’s face it 2020 was a terrible year for many reasons — not least of which was the devastating health and economic effects of Covid-19. However, we forget that even before Covid shocked the world into near complete stagnation, the global economy was only just about doing OK, with most countries still considered to be in a state of recovery from the 2008 catastrophic failures in financial markets. Indeed, many experienced observers from a wide spectrum of industries had already been predicting various cocktails of market bubbles bursting, various economic recessions and financial market corrections for some time.

Now that thankfully, we have viable Covid-19 vaccinations, we can begin the slow journey back to some semblance of normality. Will we ever get back to pre-Covid normal? I doubt it. People have been exposed to new ways of working, new ways of living, communities have been re-energised where we support each other — mostly all leading to better situations than before. But the road to recovery will be long and by all accounts Covid and its variants will be with us for some time to come. Along the way, this will be blended with impacts from ongoing trade wars, nationalisation (e.g., Brexit), economic down turns, and government borrowing etc. — most of which we have yet to feel the real effects of.

So, how does Venture Capital and Circular Economic principles help us? Firstly, the bedrock of nearly all industrialised economies is small to medium sized businesses. Yes, the mega corporations and enterprise giants steal the headlines, but it is the SMEs that build the foundation of economies. When Venture Capital is applied correctly, considerately and at scale it can have an energising and rejuvenating effect on economies at local, national and regional levels. The global economy that we spent the 80’s, 90’s and 00’s establishing still exists (mostly), and so Venture Capital applied in localised environments across the world in mature supply chain networks should stimulate the economies involved at their most basic level, fueling firstly local recovery, then being the catalyst of global trade again.

Today across the globe we turn vast quantities of raw materials and resources into a huge range of extraordinary innovative and useful things. The pace of technological progress has been accelerating since steam power first revolutionised industry. As consumers we now have access to products and goods from all over the world at prices that are affordable for the masses. We now live better lives, have access to better capabilities and are able to do more than any previous generation. Yet, despite all this advancement a single new virus caused a pandemic which was able to paralyse the world.

This is where Circular Economic principles can play a critical role. We have become acutely aware of our impact on our planet and the need to manage our resources so applying the principles of designing out waste, applying re-usability methods and supporting regeneration coupled with a more long-term, portfolio based, outlook in Venture investing should allow economies to be refueled and reconstructed where the pillars of growth come from moderated consumerism mixed with liberal doses of embedded systems of sustainability, reliability, reducing reliance and most critically, improved resilience.

We can design out the negative factors arising from designed-in obsolescence to fuel future product sales and mass manufacturing growing ahead of demand. We can instead promote, influence, invest in and catalyse a new generation of SMEs to build innovations, products and services which introduce embedded Circular Economic principles to the masses. Given all the technology and science advances we have access to, is it too much to expect that we can live better lives and have better things that last longer, to help us do more without causing unnecessary dependencies, negative impacts and other unwanted consequences.

If you are an Investor realising the importance of switching to a Venture Capital model built on Circular Economic principles, get in touch with us to learn more about how Kavedon Kapital can help.

Our deal room is also open, so all high tech early stage Founders please head over to this page to submit your deck.

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