Innovation Anarchy: Sorry Chicken Little, the Sky Isn't Falling

Last weekend I was in Grayling, Michigan for the famous canoe marathon, a 14-hour, non-stop race through the night. The Ausable, known as the Holy Waters, is a beautiful river with many naturally fallen trees, obstacles, and tight bends. Given the obstructions, some racers memorize every bend in the river, others have LED lights that break the dark. As 80 canoes passed us over the course of 20 minutes, the brief lights highlighted the night’s hatch. 100,000 bugs otherwise hidden in the dark, hovering over the river. Alive for a night. Dead in the morning.

Over dinner, my 15-year-old niece asked me, “Have you heard about CRISPR? Gene editing will change the world.” GMO is so Y2K. Later, as we watched the bugs outed by the canoe lights, she announced, “In the future we will get all our protein from bugs.”

Gen Z has the same zeal to help society, but have moved on from the “Hope” that drove their older siblings. Gen Z are entrepreneurs making hope a reality. If my niece is right, I am guessing by the time I retire I will be eating “Bag of Bugs” and like it. Tenderloin will go the way of Betamax. Gen Z bio hackers are tomorrow’s Zuckerbergs.

The world’s population is on track to increase by nearly 50% over the next 45 years, reaching 9.1 billion by 2050. But food production needs to grow even faster. Why? Because we are also growing our standard of living, which means people eating less rice and more meat. More meat means more feed for cows, pigs, and chickens. All this means greater demand on farm land and yield. More farmland means more deforestation, water use, erosion, chemicals, etc.

Or does it?

The thing about innovation is the day before it happens, a problem seems impossible. The day after, the innovation seems obvious. Did you think the iPhone would become a critical appendage on June 29, 2007 when it was introduced? Could my niece live without it?

When iSelect hears that prognosticators think we won’t have enough food, we wonder….

Will indoor farms, derived from innovations in growing pot, deliver leafy greens year round in every major city?
Will CRISPER optimize photosynthesis to match LED spectrum light?
If 38% of corn crop goes to feed, what happens to farming when instead it comes from a factory?
Will your next hamburger be grown in a lab?
Will crops be optimized to meet unique needs of customers at Walmart, Whole Foods and Panera, turning commodity into specialty crops?
Will electric cars wipe out the ethanol market? And 29% of the related US corn crop?
Will demand for farmland actually go down, rather than up?

iSelect thrives on one simple truth: Insurmountable forecasts of the future are certainly always wrong because, if it really matters, entrepreneurs will fix it.

Here is what I am reading this week to understand how smart people get things wrong:

Population Decline and the Great Economic Reversal: Maybe we flipped the sign convention in the population calculation.
Enernet: what we got wrong about the internet: Ethernet inventor Bob Metcalfe explains how they were so wrong about the internet.
Science May Have Discovered the Solution to World Hunger: Why not make proteins in a factory rather than the farm?
The Worst Tech Predictions of All Time: We rarely guess right.
Nuclear Energy and the Fossil Fuel: Hubert’s original 1956 Paper on Peak Oil, an accurate but irrelevant conclusion.
The Population Bomb: Dr. Paul Ehrlich’s 1968 forecast that the in the 70’s and 80’s 100s of Millions would die of starvation. Are we dead yet?

Other things I learned this week:

Let me know if you read something I’d like, or if there are other sources I should add to my weekly reading.

And the bugs? Our venture team is now looking at bug protein. More there than I realized, now that we are shining a little light on it.

Consideration

With 2021 well underway and with public markets still strong, we think it is an important time to highlight some of the key private market, venture investment themes that iSelect fund has identified for the year. We believe technologies transforming the Agriculture, Food and Wellness markets will flourish, with a focus on four areas: technologies that enable better food choices to drive better health outcomes, technologies that drive better, more profitable farm operations, technologies that drive the Consumerization of Healthcare, and biome-based treatment technologies. At iSelect, we invest for impact AND performance. We offer qualified investors access to emerging growth companies through our national venture capital strategy. Our unique structure allows our investors to continue to invest in these companies as they develop.

Timing

Why is now the right time for venture? The answer is that now is not explicitly the right time. Venture is something we need in our economy at all times. Now is not better than any other particular time. The question is, why ever stop? When we look at the challenges we’re facing in food and healthcare the reality is there is someone, somewhere who has an insight about how to build a product that will solve those problems. And if they put the right resources to it, they will succeed. As long as we need new technology to make life better or make our lives more enjoyable, we need venture capital to help fuel those entrepreneurs.

What is iSelect as a product?

iSelect is a very unique product, but when you break it into its parts it’s fairly easy to understand. On the front end we’re a traditional venture capital fund. We have a diligence process. We have an investment process. We have categories of industries where we have focus and real expertise, and we invest in companies in those areas that meet requirements for the fund. On the back end we’re unique in that we don’t raise a large amount of capital at one time and deploy it over the life of our fund. Each deal that we bring onto the fund, our investors have to prove and determine to invest in that deal. We have to constantly prove our diligence standards. It’s accessible, transparent and easy for investors to come in and see our comprehensive process.

What is the ideal iSelect company?

We are looking for founders that are passionate and we want the problem they’re trying to solve to be big, real, and painful. We want the solution to be revolutionary and we want our capital to be able to help them solve that problem. We want to know that they have customers involved and that the solution they’ve come up with actually meets those customers’ and market needs. And we want the team to be capital efficient with the money they’re spending.

What does the ideal iSelect company look like?

We’re looking for a company that has an opportunity to have a 10x return to our investment or greater in a period of three to seven years. What excites us at iSelect are companies that are solving big problems. We want companies that are going to be the Monsantos of the future. Not just in the size and the scope, but the impact they have on people’s lives. We want to create positive impacts on people’s lives, so we invest in areas like agricultural production and areas like producing healthy foods for our kids. They are problems that impact real people’s lives on a daily basis. That’s what we’re trying to do at iSelect. We’re trying to solve the big problems out there. Find ways to bring capital to the entrepreneurs who are the real heroes out there getting up every morning, beating away at these things that are problems that you and me and everyone else faces in their everyday lives.

What is iSelect?

iSelect is a venture capital firm. What that means is we look at hundreds and hundreds of different companies and we apply tough diligence standards to each of them, looking at whether the team has a good plan for growing the business, whether the team is qualified and credible, and more. We do that to resolve the few who provide the best opportunities for investors. And then iSelect takes that smaller set of investments and goes to investors who are interested in venture capital and provides a way for them to invest in these companies, either individually or all at once. We co-invest alongside other venture capitalists. We source transactions through to an exit where the company would become public or get bought. And we manage that whole investment process on behalf of our investors.

Sorry Chicken Little, the Sky Isn’t Falling

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