Mattias Ljungman, co-founder and partner at venture capital firm Atomico, says that whatever Donald Trump may want you to think, he and politicians like him are not the decisive change-makers of our age.
It is clear that governments cannot solve our greatest problems on their own. Many of the challenges the world faces today have been on the agenda for years. Two of the greatest – climate change and the provision of adequate and manageable healthcare – have been grappled with by governments for decades to varying degrees of dissatisfaction.
For real progress we need to turn to the entrepreneurs employing cutting-edge technology, who are our best hope for change. I am not referring to Mark Zuckerberg and Bill Gates – although they are doing amazing things – but rather a new generation of entrepreneurs and engineers in Europe. They are tackling hard problems, often straight out of Europe’s outstanding research universities, and are now poised to use this technology to change the world.
However, their great ideas and talent will not be enough on their own. Today’s entrepreneurs continue to need capital, but now – more than ever – they also need the benefit of others’ experience. A good venture capital firm has to provide both.
Venture capital is the right approach to fund entrepreneurs tackling the biggest problems – it is a way of injecting capital into promising high-growth businesses at an early stage of their development. While the cost of creating a company has fallen from USD2 million in the late 1990s to just USD5,000 today, tackling big problems means most technology-enabled companies will run at a loss at the beginning. However, an entire venture fund’s performance can be driven by backing a small number of really great winners, so it is a model that allows investors to take on the types of risk required to back truly transformative companies.
Ambitious entrepreneurs with the most disruptive technologies also need expertise to scale up their businesses. Many of our most successful entrepreneurs have tried and failed several times before they got it right, despite having access to capital. Access to experience is critical if they are to have global impact – especially in heavily regulated and fragmented sectors.
Fortunately, there are now generations of experienced entrepreneurs and venture capitalists who understand the pitfalls of entrepreneurship and are available to help. Leveraging this collective and hard-won wisdom to help a new wave of founders is vital if we are to solve the world’s biggest problems, and part of what any good venture capital firm should be helping with.
Healthcare is one area where technology introduced by entrepreneurs is already making an impact. The world’s major regions are expected to see healthcare spending increases ranging from 2.4 per cent to 7.5 per cent between 2015 and 2020, while the US alone spends more than USD3 trillion annually on the sector.