Mark Twain famously said about the weather that “Everyone’s talking about it but no one’s doing anything about it.” Now that’s changing. Thanks to Web 2.0, the entire world is beginning to collaborate-for the first time ever-around a single idea: changing the weather.
We have one affordable, global, multi-media, many-to-many communications system, and one issue on which there is growing consensus. Climate change is a nonpartisan crisis and all citizens, businesses and governments have a stake in the outcome. Solving the crisis will require leadership from every country and every sector in society.
I’m delighted to be an adviser to ClimateSpark, a new venture capital contest sponsored by the Toronto Atmospheric Fund. The world needs innovation, and for years innovation has been linked to venture capital. But the current process for fostering early stage innovation is not working as well as it could.
“The problem,” according to a 2009 report by North Venture Partners, “isn’t the number of opportunities investors are presented with, but it is rather the lack of an efficient means of filtering the options.” Throughput, not supply, argues the report, is placing unnecessary constraints on today’s innovation system. “How do investors find, filter and fund the most promising new opportunities in a deep ocean of possibilities? The truth is they can’t,” the report concludes.
One reason for the swelling pool of promising investment candidates is the proliferation of low-cost business infrastructures that make it cheaper and easier for companies to get up and running. One study found that the availability of open source tools, cloud computing, and the rise of virtual office infrastructure has driven the cost of launching an internet venture down from $5,000,000 in 1997, to $500,000 in 2002, to $50,000 in 2008.
Lower costs to launch should mean more new companies and more innovation for VCs to fund. But it doesn’t. It actually makes it harder for companies to find the money and also the attention they need. Why? More companies receiving investment means more companies to supervise and more demands on the investor’s attention. After all, VCs usually add more than just money—they make introductions, assist with strategic sales, and help recruit top talent.
So what’s the alternative?
ClimateSpark is modeled partially on VenCorps, a form of community-powered venture capital that believes the crowd can both filter the global wealth of opportunities and channel more intellectual horsepower into making each investment successful. We profiled VenCorps extensively in our book, Macrowikinomics. ClimateSpark and VenCorps put up the money, but the choice of winner belongs to the community.
Applicants can upload a video elevator pitch, share some biographic details and/or post an executive summary. The community at VenCorps (made up of thousands of entrepreneurs, scholars, scientists, angel investors, service providers and government officials) then reviews and ranks each entry using a five-criteria weighted scorecard. During a challenge the top nine startups (as determined by the community) go on to the next round, where they can win an investment (typically US$50,000). That may not sound like a lot in typical VC-terms, but it’s enough to kick-start a small enterprise as some of VenCorps’ early successes have already demonstrated.
The $200 million GE Ecomagination Challenge: Powering the Grid, relies on similar collaboration. The Challenge is an open call to action for businesses, entrepreneurs, innovators and students to create a cleaner, more efficient power grid, and speed up the adoption of smart grid technologies. The Challenge opened mid-July and closed September 30th. More than 3,500 pitches were made, and more than 74,000 people used the platform to vote and comment. Sagle, Idaho-based Solar Roadways received the highest number of Challenge community votes and received a $50,000 award.
With the proliferation of social media and social networks, society now has the most powerful platform ever for bringing together the people, skills and knowledge needed to solve the many issues confronting the world. In this Wikinomics spirit, I am proud to be part of the ClimateSpark initiative.