It will always be a Founders' market.

When monetary policy changed a few years ago, consensus was that we had entered a buyers’ market in venture capital. This conclusion is false. It’s always been a Founders’ market. What changed was the proportion of luxury startups that received funding and the level of profligacy allowed in startups’ uses of capital. Innovation has always been driven by inspired individuals who corral teams and tools to confront important problems and advance human progress.

The philosophy

Startups solve problems. The ones solving the hardest problems reap the biggest rewards. In the last 250 years starting with Industrial Revolution, determined entrepreneurs have delivered unprecedented progress in human development for all of us to enjoy––information technology, energy, transportation, health & science, economics. Today’s biggest problem is making this unparalleled progress available to the billions worldwide who currently lack access. This problem is critical because (i) if neglected, it poses an enormous threat to our way of life, (ii) it demands an unprecedent level of coordination, and (iii) it represents a significant opportunity for the best Founders to build productive businesses that address underserved billion-person markets.

The problem set

Unprecedented human progress remains unevenly distributed and this has created critical billion-person gaps that must be eliminated: We live longer but are more chronically ill––4.5B people lack access to health services. We simultaneously have abundance, waste, and insecurity of food––900M people face severe food insecurity. We are wealthier but have acute income equality––3.6bn live in countries where debt interest payments are now greater than the spend on health and education. We have conquered space, but our own home is in danger–3.3bn people live in places highly vulnerable to climate disasters.

What’s wrong with the current setup?

Public institutions tasked with the broad distribution of human progress are struggling – they need help. Their capability, capacity, and credibility face significant challenges.

Capability: Government systems and infrastructure have not kept up with technological innovation and encounter frequent distribution bottlenecks and service outages. Public institutions are struggling to attract and retain the best talent.
Capacity: Ballooning government spending on geopolitics, ideology, and cost of capital curtail the resources available for addressing progress gaps. Governments’ private sector partners are entrenched, haven’t invested enough to update their own systems, so they overcharge.
Credibility: Governments are: debilitated by the accumulation of bureaucracy, compromised by special interests and lobbies, and increasingly hijacked by clientelism and key employees driven by personal interest.

Private startups, led by a new type of generational Founder are primed to step in as the perfect partner.

The generational Founder

A new type of startup Founder is taking the lead in closing humanity’s widest progress gaps. These Founders are on a mission: they are sharp operators, with a deep, (often) personal understanding of the problems they are solving, but are pragmatic. They are adept at deploying technology to reimagine existing business models and to invent improved ones. They have a knack for building companies that can deliver compelling consumer value and investor return by serving large, often economically difficult (low-income) markets that are underserved. Most importantly, these Founders can navigate complex stakeholder incentives demanded by such large projects. Fortunately, there is a growing supply of these Founders. We have a few of these in Fairbridge’s portfolio and we are looking for more: One Founder decided to start a business to manage personal balance sheets after his family encountered difficulty navigating home ownership after migrating to the US from India; Another Founder, took matters personally when frustrated by his family’s inability to access secured credit simply because they did not have a w-2. The future is in investors’ ability to mobilize compact, powerful communities of these founders, and to provide them with comprehensive support.

Generational talent for generational problems

In the 2010s, an oversupply of capital drove unprecedented demand for Founders at all levels of capability and significance of mission. Today, the demand for the generational Founder is at its peak. We are once again turning to these men and women to lead us into the future…“[the] Composer, [Founder], sculptor, painter, poet, prophet, sage, these are the makers of the after-world, the architects of heaven. The world is beautiful because they have lived; without them, laboring humanity would perish.”