The mission of Katarsis Ventures, is to demonstrate to others, that it is possible to nurture innovation, enable enterprise and pipeline investment in hard places.
What makes them hard places?
This is the question people ask us the most, and this piece is part of an answer.
People use “hard” to describe difficulty, but also certainty, and when they demand clarity; hard work, hard as nails,the hard facts.
“Hard” is our chosen adjective. People use “hard” to describe difficulty, but also certainty, and when they demand clarity; hard work, hard as nails, the hard facts, for example. More people seek us out, because we can show how we are mastering delivering this mission in hard places. They are interested in our investment thesis. Part of the thesis is our definition of a “hard place”. This is becoming clearer and continues to evolve. This is shaped, through our analysis of commonalities between places. We use internal perspectives and external, rather than just one or the other. We have tried other definitions, and borrowed those of other agencies. This didn’t work, but our approach remains compatible.
Hardness is created by pressure. Extreme pressure can be caused, by several layers of individually, hard things. We started to learn about hard places by being interested in the different pressures that defined the dynamics of a place, and the layers and foundations on which things get built. Some hard things are very beautiful and scarce, like diamonds for example. We don’t see hardness as only a positive or a negative. We wanted to do business in hard places, to work with those diamonds. As a fair-profit enterprise, our aim is not their shine or to make a fast buck trading them. Our profit motive includes making a fair-profit, to invest in the social profit of enabling change makers to change places. Change makers are rough diamonds.
The industrial use of diamonds is a useful metaphor to think about entrepreneurs in hard places. They use their own hardness to grind, and crush and drill their way into the status quo and against the pressures and layers of a hard place. If they succeed there is a breakthrough, a release of pressure, a collapse or significant movement between layers, an earthquake even. Change happens, the sands shift, and new realities can be realised.
Here are the layers we suggest define a hard place.
In hard places, the entrepreneur can be described as a pioneer. They dare to go first in places others won’t or in a different way. They will perhaps be in competition with prospectors from elsewhere or protected and powerful interests. Entrepreneurship will not be considered mainstream, nor will it be a methodology or approach which is well understood. The whole concept, like the entrepreneurs, will be emerging. At this level, a startup may not just be positioning itself against competition, it may have to compete with monopolies as well as cultural expectations and unconventional market dynamics, such as donor economies and informal economies.
In hard places, the market in which the entrepreneur rubs against and tunnels into, will be ripe for new ideas, business models and ways of working, and/or will be an emerging market in itself. At this level a business model may be up against high levels of subsidies, but not necessarily qualifying for them, unfair competition or the reality that a market doesn’t really exist and will need to be created or carved out against strong defences and those protected interests.
In hard places, the country will be classed by others as an emerging market, either emerging from a complex transition or entering into a high potential period in its development journey. At this level, the credit rating of the country, is likely to be lower than a well run enterprise, there will be plenty of investment for established companies, but the wrong mix of capital for risk taking, and sustainable development. This means the most ambitious innovation and scaling, will inevitably be of global significance, and need support from outside the country. In these countries, there is little truly “local” most opportunities are global and local at the same time.
In hard places, the systems that support the market/industry that the entrepreneur is leading, or the country in which they are in, will be emerging. This could include shifting international politics, developments in the way it is financed, burgeoning demand and supply for that market, fragmented or unpredictable access to the market. These systems can be described as emerging or in complex transition, more than then could be described as truly accessible or mature.
Emerging entrepreneurs x emerging markets x emerging countries x emerging systems = Hard Place
Four dimensions of “emergence”, emergence to the force of four. Compounding each other, colluding with each other, compressing the place, into being a hard place. In the second part of this piece, I will share something else people have encourage us to try and articulate; the Pioneer’s Premium.