Building an Economic Ecosystem for New Business Models and Ideas

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The Purpose of an Ecosystem

In current finance with for-profit business dominating, there are institutions and structures designed to support the creation, incubation, and growth of for-profit ventures. New ventures are created with money from angel investors or seed financing venture funds. As these ventures mature, they continue to receive investments from venture capital funds and other big institutions like private equity hedge funds. Eventually, many companies go public, raising money in stock markets where ownership slices in these companies are openly traded. Finally, there are many institutions that exist to service growing companies: special banks like Silicon Valley Bank, legal firms like Wilson, Sonsini, Goodrich, and Rosatti, etc.

In new countries working to develop an ecosystem, one generally finds that the ecosystem builds from the top down. First there are banks and lawyers. Then there is a public stock market which facilitates the conversion of private wealth for the owners of the largest companies. Next, if the country has sufficient growth and political stability, you might find venture funds loaning money to help successful businesses grow. Then, once a pattern has been established for successful entrepreneurship, you will get a group of former entrepreneurs and management at companies that have grow and debuted on the stock markets who will invest as angels. The presence of angel investors greatly accelerates the pace of innovation and new company creation.

So normally, an ecosystem grows backward from its need. Entrepreneurs need mentoring help and seed funds first. Then venture funds. Then the stock market.

If we want to accelerate the growth and innovation of new business models and ideas, we need to intentionally build a complete ecosystem with all the parts, especially the ones needed by new ventures. We need to help build an ecosystem backwards from its normal pattern.

A Potential Social Venture Ecosystem

An ideal ecosystem for social ventures would offer help in the following ways:

  • Mentoring and Idea Brainstorming - A system to support social entrepreneurs as they develop ideas
  • Incubation - Guidance and logistical support (office space, phones, legal assistance, meeting space, etc.)
  • Seed Finance - Groups of investors or institutions willing to invest in pre-operating social ventures.
  • Growth Capital - Groups of investors and mechanisms to provide capital to grow social ventures.
  • Legal - Firms tailored to the specific needs of social finance and corporate structure.
  • Banking - Banks that are comfortable dealing with social ventures and alternative corporate governance.

The Role of the Social Web

The greatest risk for any new venture is an inability to gain traction.

Those present at the Contact Conference alone can ensure that good ideas gain traction. So if we can develop new ideas together, then work together to make sure these ideas gain traction, we can all gain the benefits of a complete ecosystem. Each of our respective ideas will have greater potential for success.

Further, we can develop new ways of funding social ventures that will allow us all to spark and ignite a new revolution in the way the whole world works together.

Potential Ecosystem Participants

  • Crowdfunding - Kickstarter, et al.
  • Shared Brands - COMMON (see: http://www.common.is/)
  • Incubators and Entrepreneur Mentoring - COMMON (see: http://www.common.is/)
  • Technology Developers
  • Social Venture Funds - Accumen Fund, Social Venture Fund, etc.
  • Crowd Sourced Government driven based on Public Subsidies - iDea Framework (see: http://www.idea.com.gr/)

Helpful Resources