The Democratisation of Power
A WIP Investment thesis
Back in March 2020 I first penned down a brief investment thesis. I argued that it was tech for good’s time, and that 3 factors were contributing to its rise:
an acceleration in tech innovation;
tough society’s challenges yet to be fully addressed by governments;
death to the idea that a business can’t do good and make a shit ton of cash at the same time.
Since then so much has happened: a pandemic, a war in Europe in the 21st century, extreme weather thanks to climate change. Tech for good might have been a cool new thing in 2020 but it is now a necessity. The pandemic laid bare how much tech could improve healthcare, how the future of work is dramatically different from a pre-pandemic world, and how startups need to take matters into their hands to help solve the climate crisis.
So here’s my investment thesis 2.0. This time I’m digging deeper into the spaces that make me excited: healthtech, the future of work, and financial inclusion. But before I go into specifics (which will most likely be in another post because this turned out to be quite long already), let me share the foundation that lies underneath it all.
Welcome to the democratisation of power, mate
Throughout history we’ve been moving towards the democratisation of power. We’ve come a long way from the days of concentrating power in the hands of the few and leaving the many with very little - if any - liberty. Feudalism and its serfdom left many in indenture servitude to the benefits of the Lord of the land. How much control serfs had over their lives? It depends. If they were in Russia, their condition was not very different from that of chattel slavery. After all, “peasants could be bought, transferred from place to place, and their families broken on the whim of the lord” (O’Rourke, p. 424). Slavery - and more specifically the Transatlantic Slave trade - justified kidnapping people and treating them like chattel you could do whatever you wanted with.
Fast forward to today and in much of the world people “have never had it so good” to borrow a phrase said by Harold MacMillan, Prime Minister of the United Kingdom between 1957 and 1963. We have more freedom than we’ve ever had at any point in human history. But I’m not talking solely about negative freedom - the notion that liberty is the lack of obstacles, constraints or interference in our way. More of us have more positive freedom too - “the possibility of acting — or the fact of acting — in such a way as to take control of one’s life and realize one’s fundamental purposes”. And it is that freedom that gives us the power to do as we see fit, to shape our lives and achieve self-realisation/fulfill our potential.
So we have higher degrees of freedom. We should take some time to pat ourselves in the back. But we’ve got a long way to go if we want to continue to democratise power. Many obstacles still remain in our path if we want to increase even further how much freedom we have in our hands. Social mobility is poor: in countries that used to think they did well like the UK it’s been stagnant since 2014, in the US people are asking whether the American Dream is over; in other countries social mobility has never been much of a thing. Inequality is on the rise with the World Bank projecting that by the end of 2022 198m people would be joining the ranks of the extreme poor. Gender equality is still a bit of a dream especially in certain parts of the world, and geography still plays a major part in how much freedom and opportunities you’ll get. I don’t have to look far to see it. I’m lucky because my parents somehow settled in Italy and gave me opportunities they were never afforded themselves whilst growing up. But we don’t even have to think about different continents. We’ve got inequality in our backyards. And there’s been a bit of a backlash (an understatement probably) in recent years to the democratisation of power. Just look at the rise of the far right in Western democracies, the rise of authoritarian regimes around the world. In essence, things have definitely become better if we look at it from an historical perspective but things remain pretty grim for many people still.
Governments have been the ones that have empowered people in the past. They have done away with obstacles in the way - granted that they had been the ones to put those obstacles in the way to begin with - and they have created and promoted institutions that give us the ability to exercise our freedom and realise our potential. Think about education - how it went from something only a privileged few could get to a universal right. But governments are slow, bureaucratic, and they don’t always have the capability or political will to deliver, to solve some of the problems that are an obstacle to the democratisation of power. But technology just might. (Or at the very least governments and tech cos could both do their thing to make a difference.)
So this relates to tech for good… how?
Now that we’re past talking about the foundations of my thesis, here are things I believe to be true.
We’re entering a new age - the tech for good age. A number of factors has made this possible:
Tech & scientific advances continue to happen and fast. Let’s just look at the Covid 19 pandemic. How long it took to get a vaccine? Less than a year. Compare that with the standard 10-15 years required for vaccine development. AI drug discovery companies like Benevolent AI leveraged their tech to identify existing drugs that could be repurposed to treat Covid. How cool is that? But we can look beyond science and hard core deep tech to see that tech innovation is accelerating. Generative AI is having its moment, crypto is not yet mainstream (and it’s crypto winter season now and let’s not talk about FTX) but we’re seeing more and more projects & cos leveraging crypto in innovative ways.
Governments are not fully addressing the challenges of our time. A few examples of such challenges yet to be solved? Youth unemployment and underemployment across Africa: 3 million formal jobs are created every year and they can’t meet the supply of the 10-12 million young people entering the workforce each year. In the US around 100 million adults have medical debt. I could go on.
Businesses can make lots of money and do good at the same time. Or they increasingly have to if they don’t want governments to sanction them. A clear example of this is the flurry of legislation & regulations passed in the EU to make the block carbon neutral by 2050 - e.g. the European Climate Law. But cynicism aside, more and more companies are becoming certified BCorp because they want to make money and do good for people and the planet as well.
Tech is one of the best tools at our disposal to solve some of the biggest problems this world is facing. In this new age, we can leverage technology to do away with the barriers and obstacles that prevent people from fulfilling their potential in our society. We can use tech to democratise power. How cool is that?
That’s fundamentally what I’m interested in.
The thesis in practice
What does all of that mean in practice? I’m interested in supporting - with belief and real capital - startups that:
Are tech startups (or at least are tech-enabled). If you’re building an e-commerce site, or a FMCG brand, I’m not your girl.
Are solving the biggest (policy) problems of our age. I’m pretty sector agnostic but I do have a preference for particular spaces: healthcare & life sciences, future of work, edtech (especially when it intersects with the future of work), financial inclusion, and infrastructure plays that make those problems go away. I love it when a startup is at the intersection of two sectors - fintech x edtech, healthcare x fintech, etc. If you’re building the next food delivery app, I’m not your person.
Are creating opportunities for overlooked/underserved populations and markets. E.g. tackling health inequality for women or POC, providing financial tools for migrants, creating skilled blue collar jobs that pay well.
are in Europe or in Africa. I’m bullish about emerging markets in general but realistically I have little exposure to ecosystems outside of Europe or Africa. If you’re a US co, sorry but I don’t qualify as an accredited investor.
Have a variety of business models. I am partial to marketplaces/platform plays, B2B & B2B2C plays.
Some food for thoughts/Considerations
Is my thesis a Eurocentric/Western centric way of seeing the world? Absolutely. I was born and raised and educated in this part of the world (🤷🏾♀️) so it shouldn’t come as a surprise. This “thesis” is clearly inspired by Hegel’s philosophy of history and begrudgingly Marx (if you know me, you know why). I would argue, though, that other parts of the world have seen democratising trends. Look at China - the country went from the disaster of the Great Leap Forward in the 50s and the Cultural Revolution in the 60s under Chairman Mao to the second biggest economy in the world, lifting almost 800m people out of poverty over 40 years. This doesn’t mean that China is a politically free country, but we can’t deny facts: China is more economically free today than it probably ever was before. The same can be said to a lesser extent of other emerging economies.
My thesis does not in any mean imply that progress goes only in one direction. History has shown us that progress is not a given too many times. Although we have made progress in getting millions out of poverty, we’re now seeing a reserve due to the impact of Covid, the climate crisis & the rise of debt.
So what’s next?
This thesis is a WIP. It’s a second stab at writing an investment thesis - or at least what underpins what interests me. I’ll keep thinking about it and refining it as time goes on.
As for this newsletter/blog/however we want to call it…it’s likely that I’ll write a bunch of essays about the sectors and problems I’m interested in. But I’m also going to be interviewing startups building for good 😎
This year I plan to write tiny checks in 4 startups that match my thesis, and support other startups with belief capital. If you think that might be your startup reach out on Linkedin 😊
That’s it. That’s my investment thesis (for now) 💃.
Thank you Soo Min Hong for reading and giving me feedback. This essay wouldn’t be what it is without you ❤️
Until next time,
Baci,
A.