-15%20white.png)
Biohm's investment philosophy.
Source: Tzido
An investment is defined as an act of devoting time, effort, or energy to a particular undertaking with the expectation of a worthwhile result. Energy is the critical word in this definition. It is measurable and central to everything in the universe, from photosynthesis to planet formation. Energy drives our cosmos, just as money drives our human economies.
Unlike energy, however, money can be created and destroyed. It is a social construct, yet it still abides by the 2nd law of thermodynamics. The more money or energy we transform, the more entropy, or disorder, we create within our environment. And if we can theoretically create an infinite amount of money, we would be creating an infinite injection of energy within our environment, leading to more energy transformations and more disorder. This is at odds with the inherent limitations of natural systems which don’t have infinite energy sources.
Our value chains, market dynamics, and regulatory landscape define where we direct finance flows within our economies. Quick and high return opportunities tend to attract the lion's share of investments. In contrast, revolutionary ideas and transformational technologies, which are more challenging and require extended development, are often perceived as too risky.
Resources in Nature
In nature, growth occurs when more energy is made available to a system or organism. In human economies, growth occurs where financial flows are directed. Human economies don’t benefit from self-regulating and cyclical mechanisms that are inherent in natural ecosystems. As a result, financial investments can facilitate energy transformations that become centres of entropy and resource depletion - unsustainable growth.
By committing resources to ground-breaking technologies, we can replicate the patience and resilience of natural ecosystems, fostering innovation that is both impactful and sustainable over the long-term.
We know that unsustainable growth and resource depletion leads to transformative feedback loops in those environments. We also know that entropy does not abide by national boundaries, so even if we outsource extraction and waste management to other economies, the impact eventually spreads across the entire earth system.
Entropy is, however, most felt within the global south, where economies have benefited the least from cash or energy injections and thereby are least protected from climate chaos. Especially when it comes to globalised supply chains and industrialisation - the work and transformations of energy that are carried out by the global north are exported with all their entropy to the global south.
While nature has built-in limits and self-regulating feedback loops to prevent one species or resource from overwhelming the system, financial flows, lack such constraints. Hence, an endless drive for short-term profit maximisation has led to an extractive economy, placing unprecedented strain on our planet.
The long-term, self-balancing growth model found in nature is the blueprint for a biomimetic approach to investment - one that supports sustainable and radical innovation for significant long-term returns rather than quick short-term returns.
Patient Investment
We can sometimes look to the dominance of fossil fuels with a kind of mystical awe. Yet, if we view this dominance simply as the result of sustained financial investments, we can demystify its hold on our world and see that this could be otherwise. If we are to achieve a paradigm shift towards regenerative and revolutionary technologies, we need to direct our substantial, patient investment into those areas.
Source: Aerial Views
However, truly transformative ideas are often not the ones that generate quick returns; rather, they can be seen as financial sinks, requiring years of investment and trial and error before they yield exceptional rewards. While conventional investors may balk at this slow burn, the long-term financial and societal benefits of such innovations can be monumental. By committing resources to ground-breaking technologies, we can replicate the patience and resilience of natural ecosystems, fostering innovation that is both impactful and sustainable over the long-term.
In conventional venture capital (VC) structures, a fund’s lifecycle typically spans 3-7 years and in some cases more recently stretching to around 10 years, which may sound long-term but is relatively short in the grand scheme of innovation, compliance, and commercial cycles. VC funds are structured with Limited Partners (LPs) who provide the capital, and General Partners (GPs) who manage it. LPs expect a return on investment within the fund’s lifecycle, leading GPs to focus on quick exits and high-growth, safer, and less-radical startups that align with these short timelines.
This structure inadvertently encourages short-termism, prioritising quick, high-yield opportunities over long-term, transformative innovation. A biomimetic approach to investment would extend fund lifecycles and embrace patient capital, creating space for technologies and solutions that require time to evolve. This patient approach to investment and reward, yields significantly high returns to investors, whether it be through dividends over time, or through a future exit strategy, 10+ years from the point of investment.
Biohm's Journey
When we decided to take Biohm out to the ‘shark tank’, after 4 years of boot-strapping and self-investing, we set up a trap. A trap that would, theoretically, catch the most appropriate investor for our kind of company. A company that is built on the foundational goal of realigning natural and cultural systems and doing so on a timeline that was more aligned therefore with nature time, not VC time. The trap consisted of an initial meeting to hear their thoughts on an 80+ page document that delves into Biohm’s theory of change.
Few investors fell for the trap but those that did were indeed very aligned with Biohm’s philosophy and vision. Investment rounds are rarely plain sailing. They can be highly impersonal with layers of bureaucracy.
During our 8-month journey to find investment partners, we were deeply moved by two remarkable individuals who shared our vision for innovation and regeneration. They became advisors and friends, and were soon-to-be investors. They tragically and suddenly passed away which had an immense impact on us as individuals and as an organisation. Their belief in radical change and their generous spirit reminded us that true investment partnerships are built on human connections, not just financial transactions and their legacy continues to push us to strive for positive and holistic impact.
Eventually the process brought us to a highly aligned investor that was just as obsessed with nature as we were. They were an established investor managing a $1.5 billion investment portfolio at the time. They have backed and supported Biohm’s evolution and growth over the past 4 years and continue to work closely with our executive board to holistically evolve our levels of sophistication as a viable system within our human economies. The company’s IP wealth and value is steadily multiplying as we prepare for the significant scaling of our biotechnologies in the immediate future.
Although patient and aligned long-term investors may be difficult to find, they exist. They appreciate the long-term and sustainably growing rewards of the investments they make today. Just as ecosystems invest resources in both stable species and disruptive adaptations that respond to environmental changes, a biomimetic investment model would blend steady, dependable assets with visionary, high-potential innovations.
In nature, disruptive adaptations often come at a high initial cost - whether in terms of energy, risk, or resource allocation - but these adaptations enhance resilience and increase the ecosystem’s chances of survival in changing conditions. Similarly, investing in groundbreaking technologies that address global challenges may require more patience, but the resulting societal and financial returns can far outweigh the initial cost. It’s playing the long game because the reward is worth the wait.
The Importance of Aligned Investors
Well-considered biotechnologies that are both environmentally and socio-economically regenerative provide an excellent opportunity for wealth distribution. Investments made in biotechnologies that, in turn, invest in local communities when scaled, in the way Biohm’s mycelium insulation manufacturing facilities would provide a profit share to the local community, provide investors with opportunities to have economic and social impact and resilient returns.
As part of London's vibrant ecosystem of innovative start-ups and scale-ups, we are disheartened when companies’ potential is crushed by partnering with short-term visions. Investors and funders that are aligned with the company’s approach, philosophy, and vision over the long-term have a deeper connection with the company’s decisions, responsibility, and impact. They build a symbiotic relationship with the entrepreneur and the company’s management team.
The document we shared with investors stated something along the lines of ‘if you are interested in short-term financial returns, then this may not be for you, but if you want to join the biorevolution, welcome’. We would often receive questions from investors about Biohm’s exit strategy to which we would say ‘What exit strategy? There isn’t one.’ This may seem abrupt, especially in a VC investment market. However, it’s important to be transparent with our intention so neither party feels that they are wasting their time. Today, Biohm’s subsidiaries may have clear exit strategies but Biohm as a whole, as a group, is a long-term endeavour with no exit strategy in sight.
We advocate for long-term, sustainable industrial transformation that considers human perceptions, market dynamics, earth systems, and socio-economic factors. This holistic approach requires appropriate funding from aligned investors who share our values and long-term vision. Misalignment, whether in funding or within the organisation, can break projects. Therefore, ensuring alignment in values, goals, and vision throughout the entire organisational structure, including investors and shareholders, is crucial. Doing so not only makes the impossibly challenging process of a running a company and developing radical tech easier and more fun for everyone, but it also provides the stability and certainty needed to make that company thrive and in turn contribute positively to changing our exhausted world.
Author: Dr Ehab Sayed | Editor: Marina Ionita