Mar 10, 2021
What are Circular Economics ?
Author: Markus Milsted — Founder & CEO Kavedon Kapital
A big question to ask, with both a complex answer and very simple understanding.
Circular Economics are a design principle that allows us to be far more intelligent in the way we approach pretty much anything. Everyone should be thinking in a Circular way, in time everyone will be.
From a design point of view Circular Economics provides the opportunity to think about resources as finite. This is important, because in the wider Circular Economy finite resources can literally mean materials, such as Gold, Lithium or even Copper. These finite materials come from things such as ores and are known as ‘virgin resources’ (i.e., directly taken from the natural world). It’s easy to understand that there is a limit to such resource pools.
The Circular Economy is generally being used right now to force multilateral organisations to think about consumption, and the limitations that we have. Circular Economics, on the other hand, the design principles behind the wider Circular Economy have a far more reaching impact into society.
This is where we at Kavedon Kapital are focused. We are applying Circular Economics design to Venture Capital.
Remain open minded here: You can consider Founders as a virgin resource. Investors and Venture Firms generally (and I am generalising here!), talk about Deal Flow, but rarely Founder Flow. More specifically, the finite pools of where said Founder Flow comes from.
Founders are all created equal, but over time they aggregate more capabilities, more tactile skills, and know the road most Startups will follow, predicting the pitfalls before they happen. In doing so over time they are refined, directly meaning in terms of Circular Economics, we are able to value more experienced Founders in a tangible way.
However, to get to the position of being refined, Founders must undergo formative processes, and that is what Kavedon Kapital strives to deliver.
The way we think here at Kavedon Kapital is quite simple. We look to build value the first time we work with our selected Founders. We take them all the way through to the Exit Event. Then after the Exit, we attempt to upcycle our Founders into either re-Founders, or mentors for the next generation of new Founders joining our community. By doing so we are reducing the attrition of a critical resource, the Experience that our refined Founders have.
The reason this is a good example of Circular Economics is simple. The Deal Flow a refined Founder delivers is always a higher-grade quality. Having worked with Kavedon Kapital closely to success, re-Founders will inspire the next generation and grow the community.
For us, there are many types of capital resources, each of them is Circular; deal flow and insights capital, Founders as human capital, experience as risk capital, money as financial capital.
Each of these capital resources connects in a binding way to one another, and each of them in terms of Circular Economics rely on the ability to upcycle or recycle over a longer period of time, compared to the traditional linear consumption model of Venture Capital.
So, what are Circular Economics?
Well, when we talk about them in the context of Venture Capital and how we are using them here at Kavedon Kapital, they are an obvious evolution of how to build a Venture Fund for the whole community; Founder, Investor and Fund Team.
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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