COVID-19 has exposed new challenges for our world and exacerbated existing ones that we’ve struggled with for decades. From the impact of coronavirus on access to healthcare to the impact of lockdowns on unemployment - particularly for already marginalized communities, this crisis is pushing our systems to their breaking point.
If we, as a society, are to emerge from this crisis stronger, more resilient, and more prosperous than before, we must use every tool we have at our disposal. In addition to the radical changes to public infrastructure that government must make - and the actions private capital and philanthropy can inspire - we need the creativity and nimbleness of entrepreneurs to bring ideas to market and scale them quickly.
This crisis is galvanizing investors, corporations, foundations, and governments to support what we at Village Capital call the entrepreneurs of the future: the founders leveraging their lived experience to launch startups that solve systemic issues. Issues like improving the inclusiveness of financial services, the accessibility of employment, and the sustainability of our communities. The entrepreneurs of the future come from every facet of our society and their ideas are shaping a better world.
Yet the tool we use to back the most transformative ideas, early stage venture capital, disproportionately focuses on just a few sectors, just a few people, and just a few places. But a post-COVID world could look very different if we re-think what problems we support solutions to, who we choose to back with strategic and financial support, and where we invest our time and resources.
Right now, out of more than 350 of the largest venture-backed companies in the world today, less than 15% are directly addressing healthcare, food security, access to education, or climate change. Accelerators and incubators want companies to succeed and, often, build their approach around the preferences of investors as much as they build around the needs of their startups. Imagine what could happen - and quickly - if early stage investors shift what problems they invest in.
Equally important is who receives investment. COVID-19 has already had a disproportionately negative impact on communities of color and others who have historically been left on the sidelines. Unless we back those who have direct experience with those problems, we will miss the most relevant solutions. But that’s exactly how the system works right now. Less than 3% of VC funding in the US goes to Black and Latinx founders, and less than 15% goes to women.
And finally, the where. The solutions we need to build a more resilient economy won’t just live in the Bay Area or New York City. We need the ingenuity of entrepreneurs from everywhere - urban and rural, on the coasts and around the world - to mitigate these challenges.
By focusing only on certain people and places, most of the early-stage support are overlooking the most innovative, most impactful, and most investable solutions.
For more than a decade, Village Capital has been working to change the way early-stage entrepreneurs get support. We've specifically been focused on building a system that supports the entrepreneurs addressing the systemic challenges that COVID-19 is exacerbating. Our alumni are setting up rural pop-up health clinics. They are helping small businesses stay afloat and offering emergency financial aid to college students. They are driving advances in online and remote learning, and supporting laid-off workers.
Our innovators look like Lucienne Ide of Rimidi Diabetes, which is screening vulnerable patients to reduce the burden on emergency rooms, or like Sally Outlaw of Worthy, which is keeping small businesses afloat and personal savings strong. The immediacy of these solutions has sparked interest from the traditional venture system, but there’s a real danger that, once this crisis has passed, their support will fade.
Instead, let’s use this inflection point as an opportunity to reinvent the systems that society uses to support innovation - to remove the blindspots that left the entrepreneurs of the future out in the first place.
This is a chance for investors to take bold action to get beyond their blindspots, adopting new tools, structures, and approaches that look different from traditional VC. This is a chance for accelerators to actively evaluate their approach, learn from one another, and go beyond traditional models. There’s even an opening for entrepreneurs to adapt, to seek alternatives to traditional financing and to benchmark their progress in objective terms to make understanding their development easier.
We know that changing the way these systems work is hard. Because this is precisely Village Capital’s mission.
For ten years, we’ve been learning and leading in this field. We have created and refined an approach that is proven to help startups grow and scale, reaching over 1,100 entrepreneurs worldwide. We have shared best practices, support platforms, and training for accelerators and incubators through our VilCap Communities platform. We’ve tested different processes and structures for investing through our partner fund VilCap Investments, creating a portfolio that is outperforming its vintage year financially, and that is 46% women-led, 30% led by Black and Latinx founders, and 88% outside of major venture hubs - and released our research to help others do the same.
And we’re just getting started.
We are calling on government agencies, leading foundations, corporate partners, and inspired philanthropists to join us in unlocking the power of entrepreneurship to solve systemic problems. Join us in changing the way society supports the entrepreneurs of the future and the accelerators, incubators, and investors that help them grow. Together, we can reinvent the system and build a future where business creates long-term equity and prosperity.
You can see some of the first steps we’ve been taking outlined here, and we have so much more to accomplish in the coming months. If you’re looking for ways to respond to the crisis and join a coalition creating a stronger future, our partnerships team is eager to hear from you. If this work resonates with you, and you’re in a position to do so, you can also donate directly to our activities here:
Allie Burns is the Chief Executive Officer at Village Capital, bringing more than 18 years of experience working with entrepreneurs and innovators at the intersection of tech and social change.
Dustin Shay is Senior Director of Partnerships for Village Capital. He leads the development of critical partnerships among industry leaders to support team's primary mission: to create long-term prosperity and sustainability by backing the entrepreneurs of the future.
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It would be an understatement to say that a lot has changed over the last month.