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Sustainability shouldn’t require an exit strategy

July 17, 2013

2 Min Read
Sustainability shouldn’t require an exit strategy

Sustainability shouldn’t require an exit strategyI had the opportunity at a recent sustainability conference to listen to a group of budding entrepreneurs deliver their pitches to a panel of investment bankers. The exercise was designed to sharpen entrepreneurs’ skills in obtaining adequate capital to underwrite their ventures.

Each participant had an innovative business proposition built upon a foundation of conserving resources, improving personal health and increasing the incomes and quality of life for people around the world. And, each pitch ended with “My three year exit strategy is…”

Since when did sustainability require a three year exit strategy?

I understand that investors in high-risk start-up enterprises are rolling the dice when opening their checkbooks. Those investors know that a number of the start-ups will go down in flames. Thus, the return on the winners must be significant. But let’s also face the reality that “sustainability” means being sustainable.

Serving as the current steward of a piece of land that was homesteaded by a great-great grandparent is a point of pride among many farmers across the country. New farmers staking out their future on small acreages, or in alternative agriculture, are driven in large part by the desire to establish a business enterprise, and a quality of life, that can be handed down to their children. Heck, farmers making the transition into organic production have to gut out a three-year transitional period just to get certified. I doubt they think too much about their exit strategy.

The major criticism lodged against agriculture today by those of us involved in the natural and alternative food system is the transformation of family farming to industrial agribusiness. Numerous pundits have analyzed the impact on our food system as family farmers were forced to sell their operations to large agribusiness corporations. Today’s industrial agriculture is widely described as “unsustainable.” I agree.

The standard start-up business model in the natural food arena is to rapidly build a brand that will then be acquired by a major company. This strategy is often justified on the basis that the large companies acquiring the start-ups are demonstrating their commitment to the principles of natural and organic products. That argument carried a lot more weight before many of those companies lined up to oppose California’s Proposition 37 to label GMO foods.

Investors in high-risk start-ups have a right to expect high returns on their capital. At some point, though, creating new businesses that will contribute to true sustainability should include the opportunity for growth and not just an exit strategy.

I don’t have the answers. I’m just asking the question.


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