The coming decade will define the future of generations to come. As a society, we face multiple existential crises, particularly the climate and biodiversity crises, and experience wicked social problems that are already being exacerbated as a result.
We believe that entrepreneurship and venture building can and should be a huge lever to transform our current systems and shape a truly sustainable future.
To that end, we have launched Fresh Ventures Studio, a startup studio on a mission to a regenerative and circular food system. It is a joint venture between Impact Express and Metabolic, two organizations that came together around two main questions (1) what are the key underlying challenges we need to solve to transform the food system? (2) how do we build organizations that are mission-aligned and mission-protected for the short and long-term but are also designed to create globally scalable impact?
In trying to tackle those two questions, we ran into five key problems that defined the way we structured our current studio and fundraising strategy. These are the questions and the way we addressed them:
Fully understanding a problem can require a large amount of time and other resources. While design thinking and lean startup methodologies have delivered great results in finding customer problems worth solving, they fall short when working to identify the key leverage points in a system to make the biggest impact on the societal problems that need solving.
To find and deeply understand the problems we want to solve, we have developed a Challenge Due Diligence process, which effectively combines a systems analysis of a broader sector (such as land-based agriculture in Europe), with multiple systems analysis of specific sub challenges that answer questions like “Why are farmers stuck in the current system?” and “where is there a financial gap in transitioning to regenerative agriculture?”. This work involves a process whereby we start by mapping out a specific system as best as we can, then use a series of steps of identifying patterns and key dynamics, crafting narratives about how the system works, identifying root causes of key issues, crafting performance goals of an alternative system, and better understanding leverage points for fundamental change (and particularly where new ventures can play a role).
We combine this systems approach--which includes quite a lot of desk work--with talking to relevant experts and stakeholders to understand how they see the challenges and what could be done to address them. This is done as iteratively as possible so that we can update our understanding of the system with stronger input, while strengthening the scope of our inquiries to stakeholders as we better understand the system.
This is quite a significant time investment, but our assumption is that not only is it essential in order to ensure deeper and more transformative impact, but that it’s also a worthwhile investment at the level of a venture studio aimed at a specific sector.
Finding strong people and entrepreneurs that are willing to join you is a challenge for every organization. Fresh has created a program that takes 30 people through a 4-month journey to deeply understand the root challenges in the food system, help team them up with mission-aligned people, and build the beginnings of a venture that can address one or more of those challenges.
The past years we have learned the needs of people wanting to leap towards building an impactful venture. Based on those learnings we hypothesise that a program will make it easier and will help lower the threshold for talented people with an entrepreneurial itch to jump into a new pathway. A program is potentially an expensive way to address this challenge, and we’ll be observing and tweaking how well it works over the first three years of our existence.
Beyond the program, we’re experimenting with a few models for the specific purposes of the studio to see what works best.
While it can be criticized (and fairly) as being too open--avoiding the essential choice of a thesis to test--we feel like it’s important to remain flexible at this stage and learn as much as we can about where each strategy runs into walls.
Designing a solution with the highest possible leverage can often come into conflict with a pragmatic revenue model. Many activities that create societal value--such as lobbying for policy change for non-incumbent forces, providing affordable utilities for housing, energy, and water, reducing consumption, or regenerating ecosystems--don’t have obvious business models that are highly scalable. Cost-neutral business models are perfectly feasible, but when you’re not trying to extract revenue from the users, suppliers, and partners you work with and for, the business case for investment and desired growth needs to be built from the ground up.
Beyond doing our best to find the right challenges to solve and bringing in highly talented people, the main two approaches we have for addressing this challenge are as follows:
A product-service can be highly impactful in theory, but if its primary purpose is to extract profit for shareholders, or if it can be sold to the highest bidder at any moment, then its real potential to be a disruptive or transformational force is inherently clipped. Profit-maximization and endless growth are also two philosophies that are at least partly responsible for the environmental and social problems we currently face as a society. It felt imperative to us that we took a different approach--one that protected the mission of the organization while still enabling it to raise growth capital.
Steward ownership is an ownership and governance model which aligns the interests of entrepreneurs, workers, investors and society. It is based on two principles: Entrepreneurship equals ownership, and profits serve the company’s purpose. We have written more extensively about our approach to steward ownership, which can be found here.
We faced two main challenges that we needed to tackle. We started our fundraising with the goal to raise capital as a direct investment in our own organisation, enabling us to invest in the ventures we are setting up. However, this was seen as a ‘double unkown’, with the ventures that are going to be build being unknown for investors and if we were going to be successful doing it as well. Secondly the Steward Ownership principles influenced the type of investors we can work with. For heavily impact driven investors, steward ownership can even open doors faster - because it is signaling a structural impact focus potential. We did learn that some impact driven funds don’t have the flexibility to experiment with the investment structures - considering the terms of the fund.
We ended up pivoting our proposition towards investors and financiers. We have raised fund from philanthropy, governments and investor sponsorships to finance the first three years of the program, to help develop the methodology, make an adaptation of the steward ownership model and kickstart the business model. Next to that we have attracted a group of core-investors that will directly invest in the ventures we start - with us as a studio as co-founders (check out this blog for more detail). These core investors have earmarked capital to invest in the ventures we start, pay a small sponsorship fee for the program and invest time to integrate their due diligence into our program to decrease the time to investment when we start to incorporate. Furthermore we are building a network of investors that are interested in our thesis and the ventures we aim to build. By already including a broader group of impact investors on our journey to revolutionise ownership we hope to grow the group that is willing to invest, both early stage and as follow-on investors.
Why we are using the studio model
A studio also has other advantages when it comes to building ventures designed for systems change. Often noted in transformation theory is the idea that it’s almost impossible for a single venture to bring about transformational change. Instead, transformation typically requires a collection of organizations working in tandem to influence different aspects of a system. At a portfolio level, a studio can build ventures that are approaching these different levers and can at least theoretically work together to address a broader challenge.
Want to support us on our mission?
Do you like what we do, do you want to help, share your learnings or join us on our mission? In the very short term our main priority is finding great potential founders that want to transform the food system. You can help us by spreading our call for talent, by either sharing our open position or this Linkedin post. Lastly, we are always very curious to learn from other studios and venture builders and love to hear what you think of our approach.
Authors: Chris Monaghan, Bart van der Zande