This article was written by Chris Blues, Programme Manager for Social Ventures, Skoll Centre for Social Entrepreneurship and Chris Fellingham, Social Science and Humanities Ventures at Oxford University Innovation and Founder and Director of the Aspect Research Commercialisation (ARC) Accelerator.
There is a growing consensus: the time has come to use the tools of enterprise and business to solve global social and environmental challenges. Social ventures, ventures intentionally tackling social or environmental challenges, have been an exciting new development in this space through their dynamism and innovation allied to rising impact capital to support them. We believe a new entrant is emerging within this family - the rooted venture.
Rooted ventures take the deep insights from rigorous academic research be that the impact of water shortages in East Africa or the need for affordable diagnostics in low-income countries and generate products and services that can be delivered through a venture.
Fortunately, impact investors are increasingly searching for just such innovations in the understanding, solution or business model. Mainstream impact investing is growing rapidly - between 2014 and 2019 the impact investing market has experienced a 48-fold increase from USD 10.6 billion in 2014 to USD 502 billion in 2019. Unfortunately, social and environmental challenges are increasing apace - it is estimated that to achieve the Sustainable Development Goals (SDGs), we need to invest between 5 USD trillion to USD 7 trillion a year in suitable solutions.
A gap persists between the demand for investable social ventures and the supply of ventures that have a capacity, capability and understanding when solving global challenges.
Perhaps now is the time for research backed social ventures to unleash their potential? Three celestial elements are manoeuvring to form the perfect time to grow a venture with rooted impact.
- Impact investors remain frustrated due to the lack of ‘investment ready’ social ventures - mainstream impact investors are struggling to deploy capital in high impact social ventures.
- An innovative group of professors and researchers are seeking to do something new - to leverage the immense power and potential within a university ecosystem and create long term, scalable and sustainable impact beyond publishing journals and education. We are seeing a new generation of researchers that are open to entrepreneurship and venture building as a way to express their work.
- There is a desire from the public sector and government institutions, such as research councils, to accelerate research findings and expertise into practice through social ventures.
How does a rooted venture differ from a typical social venture?
The key lies not in the business model (although that may be different) but in the understanding of the problem and the solution there-crafted. A typical rooted venture typically emerges out of years - sometimes decades of research into a particular area. Deeply granular understanding of the problem, what works. This may lead to novel solutions, novel applications of solutions but most importantly it is evidenced by the research giving investors confidence their investment will yield impact.
Take SOPHIA from the University of Oxford. SOPHIA is built upon decades of econometric and International Development research around how to systematically measure types of poverty such as sanitation, access to water or education. Knowing the type of poverty is critical to crafting the right solutions to tackle it. SOPHIA developed an innovative business model built around helping companies in developing countries understand the types of poverty their employees experienced and thus helped them to tackle it.
Rooted ventures will not be limited to one subject domain, Smart Handpumps predicts when water pumps break in rural Africa, it mixes Geography and engineering to tackle the blight of water shortages. The best social ventures will directly or indirectly blend both, a technically brilliant intervention needs to be rooted in an understanding of a real problem and collaborative engagement with those who experience the problem in order to be effective.
SOPHIA and Smart Handpumps are not the first but until then rooted ventures were often lone pioneers. No longer, with the help of funds like GCRF and growing awareness from impact investors and philanthropists a new generation of academics from every discipline are emerging, leveraging their deep insights into context with technical brilliance and a thoroughly rooted evidence base to tackle societal and economical challenges across the globe.
It’s not an either/or. Rooted ventures will be part of a much wider toolkit of ways to harness the power of enterprise to generate new and impactful solutions. We do however think they will unleash innovation in the social venture world, innovation in understanding, innovation in products and services and innovation in business models.
We believe this is an exciting new era for social ventures. Rooted ventures ally some of our brightest minds and a desire for research to improve our world and focus them on some of the toughest challenges from poverty to education to health. Imagine the possible impact if we intentionally curated university ecosystems to support rooted ventures? Sprinkling the knowledge, tools, connections, inspiration, community and early-stage investment to nurture these innovation professors and researchers.