As I predicted, my forest protection work in Washington DC and similar work by my associates in aquatic ecosystems during the 1990's helped grow the emerging and now multi-billion dollar ecosystem restoration industry. My intuitive understanding that movements create markets was born out in the real economy.
By 2001, I committed to mastering the field of finance so that the movements I cared about most would be able to enter the mainstream economy and continue to grow to their full potential instead of being purposefully derailed and suppressed like the organic food industry. With these goals in mind, I formed a company eventually called EcoSector to design, market, and manage public retail investment products for this objective.
I envisioned millions of environmentally-concerned retail investors working together as ecologically and economically motivated grassroots policy advocates to undo the trillions in annual government subsidies to industries that today are destroying the future of life on earth.
My goal was to create the first publicly-traded ecological investment fund to fund ecologically-motivated businesses handling everything from plant-based wastewater treatment to terrestrial and aquatic ecosystem restoration projects. The investment fund concept required me to go from zero understanding of public finance to raising the $100 million minimum fund required to trade on the NASDAQ. Learning how to do this took longer than I imagined. After 9 years, I ran out of money and energy before I could fulfill the vision.
While I was working toward that goal, the CleanTech fiasco of the 2000's was unfolding. Similar to the organic food movement, the notion of CleanTech was destroyed by the pursuit of incorrect financial strategies by movement leaders. They naively believed that Silicon Valley venture capital firms would come on board, and all that was needed was an environmental equivalent to Google to trigger the gold rush.
I fruitlessly urged to the leaders to instead focus on creating a public finance company that would allow them to move billions of dollars into the field directly from retail investors. That finance company could have been their Google.
Financial entrepreneurship is the key to solving large-scale challenges, but when movements move into markets, leaders rarely consider the optimal way to fund the businesses that can deliver on the movements' goals. This is why movements tend to fizzle out once they start entering the mainstream economy. I have been making this point for. over 20 years, and I don't intend to stop now.
Despite the unfortunate demise of the CleanTech concept, thanks to their efforts I was able to peruse deal libraries containing of 1000's of great businesses in ecology, and pollution abatement. Sadly, few of these companies ever grew due to the false perception of capital scarcity resulting from the CleanTech leaders chasing conventional angels and venture capital funds instead of creating their own funding strategy tailored to the needs of their unique and emerging industry.
During this time, I discovered the exact root cause of this false sense of capital scarcity. Depression-era financial laws from the 1930's and 1940's ended free speech with respect to raising capital and creating investment funds. By the 2000's the legal fees required to comply with these laws were so exorbitant that a business seeking to raise $50,000 in risk capital would have to pay $50,000 in legal fees to do that!
I believe that the reason so many people despise capitalism today is that after the enactment of these laws, capital formation could only be easily accomplished by the already-wealthy who could afford to hire costly securities attorneys and build private networks of accredited investors via their natural social circles. In my opinion, the lack of access to risk-tolerant capital for the vast majority of business founders resulting from these laws has directly led to the largest wealth gap ever in modern history.
The venture capital fund business model was designed specifically to do two things:
- Minimize compliance with the new financial laws
- Create incredible wealth for fund managers at the expense of every business founder who can't afford to safely navigate the financial laws.
The Depression-era finance laws of the 1930's and 1940's created a complex legal moat around the practice of capitalism. Those who can swim across this moat today control almost the entire direction of the economy. This is the exact opposite of the original purpose of capitalism, which was invented to more broadly distribute the absolute economic control previously held by kings and feudal lords.
In my case, in the 2000's, I discovered that it would cost $2.5 million in legal fees simply to structure the kind of public investment fund I was seeking to build. And, it was illegal to make any public announcement regarding raising the capital needed to pay those fees, much less raise the additional $2.5 million that would be needed to market the fund to environmentally-minded public investors, a multi-trillion dollar ethical investment market even back then.
After 9 years of attempting to overcome these abusive and outdated anti-free speech financial laws, I was tired and broke. I decided to drop the project and focus on making money doing consulting and web development so that I could stay home and raise my two sons.