The New Era of Business reports are focused on the future of important industries and include examples sourced from around the world.

How will we finance the future?

That’s the question driving the research behind this report on New Finance, as we take a deeper look at how finance is driving the New Era Business. As Finance is at the heart of the #NewEraBiz – no business can even get started without capital and not everybody is bullish on BitCoins – we wanted to scan the panorama and look at emerging ecosystems in the (new) financial landscape. The goal of next-gen finance platforms is to help entrepreneurs and small businesses (SMBs) avoid using credit cards to finance their entity; instead, they can source capital via these platforms that leverage technology to cut out middlemen and lower fees.

What is New Finance?

If traditional finance is a vertical, competitive and rigid hierarchy dominated by a small group of financiers and industrialists, then New Finance is the opposite. Horizontal, collaborative and fluid, it is an industry that is inclusive and takes advantage of collective actions to drive dealflow.

We’ve talked about New Finance before over the course of the last couple of years.

The first real research down this avenue happened with My Crowdfunding Stud in Latin America, as the advent crowdfunding was the catalyst for many of today’s New Finance platforms. That was followed up by a trip to see what Seedrs and other early movers in the crowdinvesting industry were up to in London.

+ Finance 2.0: Wall Street Meets the Web

Then at the end of 2012, we did a small case study on what’s happening in the UK to demonstrate how the SMB Finance ®evolution is in full effect.

+ The SMB Finance Revolution

More recently, we dissected how New Finance startups like Circle Up were helping to Redistribute Dealflow to the areas of the economy that need it the most; we used Food as an example of an industry that has been chronically underfunded at certain tiers.

+ The Redistribution of Dealflow

Now we are going to take a look at this from the bigger picture and see what the next step is in the evolution of Finance. To put it in perspective, we have embedded a video by Bridgestone founder Ray Dalio to outline ‘How the Economic Machine Works.’

To summarize, the economy is essentially governed by three forces acting simultaneously – the short-term debt cycle, the long-term debt cycle and productivity growth. Together, they work to drive the economic machine that powers the global economy.

Since the financial crisis, governments have resorted to printing money as the strategy to ‘stimulate’ the economy. This stimulus drives the short-term debt cycle, which usually lasts for about 5 – 8 years. When the Central Banks lower interest rates to rock-bottom levels and turn on the money-printing taps, they create an expansion of credit and we move up the short-term debt cycle curve.

The short-term debt cycle, the oscillating squiggly line, is a subset of the long-term debt cycle, the large oscillating line, which operates in periods of roughly 50 – 75 years. When the cumulative debt in an economy builds up to a point where it is no longer sustainable, the peak of the long-term debt cycle, then we begin to enter a period of deleveraging. If done correctly, and inflationary and deflationary measures are balanced, then we can have what Ray calls a ‘Beautiful Deleveraging,’ or an orderly unwinding of a debt bubble.

Thirdly, we have productivity growth, which is the straight line on the graph that increases steadily over time. Productivity is a function of how efficiently we utilize resources to achieve outcomes that boost the economy. The key to the long-term growth of any market economy is increasing productivity.

While the video doesn’t overlay our current economic environment into the model, it appears that we are entering a period of deleveraging when you take into account that:

  • Central Banks are printing money at an unrelenting pace;
  • Consumer Debt has reached unprecedented levels;
  • Underlying inflation remains low;
  • We have rock-bottom interest rates and sky-high sovereign debt.

The ‘stimulus strategy’ has been focused on expanding consumer credit, which is administered by the banks, who have made enormous post-Crisis profits off the spread between what it costs them to loan versus what they charge customers to borrow. Unfortunately, however, much of that cheap credit has failed to reach SMBs, creating a large chasm in the SMB Finance market.

The problem is that, as many studies have shown, it is only (or at least primarily) new firms who create long-term jobs in an economy; therefore, if the required capital is not reaching the SMBs who need it most at an early stage, then a full economic recovery cannot occur. In the UK, for example, the 2012 Breedon report showed that there will be a £84 – £191 Bn gap in SMB loans if significant changes were not made.

Thus, to restore the global economy to an era of robust (and sustainable) growth, the SHIFT should be to measures that boost productivity and increase businesses access to capital, rather than giving consumers credit for consumption. And that’s where New Finance comes in.

Because it’s the SMBs (small & medium businesses) who can reignite the economy in a sustainable fashion – delivering economic, social and environmental benefits to all tiers of society – and bring full-time jobs to their respective nations.

In this light, we have seen several trends emerge in the last few years to provide businesses with the access to capital they need to startup, grow and expand globally, including: crowdinvesting, P2B Lending and sustainable banking.

Crowd Investment

Crowdinvesting is an offshoot of crowdfunding, which was sparked by the launch of Kickstarter in 2009. The crowdfunding model is a donation-based model that uses technology to efficiently enable members of a given community to each contribute small amounts of money to fund a project.

+ Business Model Breakdown: Crowdfunding

With crowdinvesting, ‘the crowds’ are able to actually invest, or take an equity position, in a seed-stage enterprise, rather than simply donating for a reward. While it sounds conceptually simple, it is a complex to implement because it requires national/state security regulators to rewrite security laws to allow for ‘crowds’ of unaccredited investors to buy shares in companies that have not filed a prospectus.

Seedrs, based out of the UK, was the first regulator-approved crowdinvesting platform in the world and uses a nominee model to enable companies to raise up to £150,000. Countries like the US, on the other hand, are trying to roll out nationwide regulations (the JOBS Act) to enable multiple platforms to work within the same framework.

While each country, and the strategy of each platform, is different, the goal is the same – use technology, and the wisdom of the crowds, to capitalize upstart companies. According to Crowd Valley, the market for startup crowdinvesting was approximately $112 Million however, the market is only just beginning and the growth will ramp up exponentially as laws are changed to facilitate crowdinvesting globally.

P2B (SMB) Lending

P2B Lending, in a New-Finance context, is an offshoot of the P2P industry, which was estimated to be a $1.2 Billion industry in 2012 and growing fast.

P2B Lending happens when one business receives a loan from an individual, group or institutional ‘peer’ rather than a bank. In a similar vein to crowdinvesting, P2B Lending leverages technology to create an efficient debt market and remove the middleman, in this case the banks. Rates are typically set using an auction or bid system, and the industry is, similar to crowdinvesting, subject to regulatory laws within each country it is based out of.

Zopa, started in the UK back in 2005, was the pioneer of the P2P Lending market and has facilitated $400 million worth of personal loans since its inception.

Now, the P2B Lending marketplace is starting to get hot, with companies like Funding Circle stepping up to give businesses access to expansion and working capital, plugging the gap left by banks. Since the company’s launch in 2010, it has facilitated $158 Million worth of loans to SMBs at an average rate of 5.8% and loan size of £65,000.

Other sites are popping up globally as well, as the market starts to take shape to start the capital SHIFT to the companies that need it. While the market is only estimated to be worth about $120 M globally, expect rapid growth in the next 5 years.

Sustainable Banking

Sustainable banking is an offshoot of traditional investment banking, with one key difference – it matters how profits are made. Rather than being a black box that bankrolls dictators and unsustainable enterprises, the goal of sustainable banking is to foster a vibrant economy so that there are markets left to bank in the future.

The essence of sustainable banking is that these banks actively fund enterprises that generate a positive impact for society. While a bank like Goldman simply acts as a ‘market maker’ and don’t limit themselves with ethical concerns, sustainable banks look to loan to and bankroll businesses that play a real role in the creation of a flourishing society.

Recently, a few studies have been conducted to compare the performance of ‘sustainable banks’ to ‘too-big-to-fail’ banks. One such study, which analyzed data between 2003 and 2012, comparing Global Systemically Important Financial Institutions (GSIFIs) versus ‘sustainable banks,’ revealed some interesting insights.

While global return on equity was greater for the traditional banks, it’s clear that it comes at the risk of depositor’s savings and assets. A breakdown of individual CAGRs in different banking categories, however, showed that sustainable banks outperformed in all categories.

It goes to show that there is a business case for sustainable banks, and that it goes beyond just ‘ethical’ rhetoric. While traditional banks will be able to maintain immense profitability for the interim, the whole banking business model will need to evolve to become more sustainable in order to bankroll the #NewEraBiz to grow globally in the decades ahead.

Market Beacons


Seedrs, who we alluded to earlier in the ‘Crowdinvesting’ section and have talked about in several previous blog posts, continue to be the beacon of crowdinvesting in our opinion.

While they have not generated the same volume as their closest competitor CrowdCube, who had about a year head start, their nominee structure and everyday-investor attitude make them the model to study for long-term crowdinvesting success in our opinion.

In addition to offering everyday UK citizens the opportunity to invest as little as £10 in startups, they also have worked with the UK Government to create the SEIS program and other seed-investing schems.

With Seedrs ramping up growth, they recently broke the £2 Million pound mark and have started opening innovative fund mechanisms, such as the recently funded WebStart Bristol, which raised £150,000 on the platform to launch their incubator.

Funding Circle

Funding Circle, who we alluded to in the P2B SMB Lending section, is pioneering the loan market for SMBs. The company is ramping up growth, developing new partnerships, and has a bad-debt rate of only 1.4%.

Beyond the numbers, they are meeting their market’s demand. A study conducted by Nesta showed that 77% of businesses would return to Funding Circle as their source for future financing. 75% of lenders, on the other, stated their willingness to increase lending in the next 12 months.

The strength with Funding Circle, other than general satisfaction and lower interest rates, is the speed. New applications are reviewed with 48 hours, and the average funding period is 12 days, compared to 15 to 20 weeks with the banks.

The company just raised $37 Million and is expanding into the US.


Triodos is one of the best of the sustainable-banking bunch. Founded in 1980 and based out of the Netherlands, Triodos is gaining traction in a banking world for a characteristic not typically associated with financial institutions, transparency.

On one side, they offer their customers the unprecedented opportunity to see where their money is being invested by acting as a ‘sustainable fund manager.’ Beyond simply offering feel-good investment opportunity, these ‘sustainable funds’ also offer a solid return. As an example, they have setup the Triodos Microfinance Fund, which helps to develop financial services for low-income people in developing countries; it has achieved an average annual return of 7.1% over the last three years.

For business financing, they only ‘finance organizations working to build a sustainable future for individuals, the community and the environment.’ Their criteria enables both charities and businesses to borrow money, with loans ranging from £25,000 to £15,000,000 and up. They offer a range of business credit products, including working-capital loans, commercial mortgages and cashflow lending.

End to end, Triodos strategy is based on openness, as they show full transparency on their loan portfolio and banking fees across the gamut. And the results are there to back their strategy. In 2012, they grew their balance sheet by 23%, increased SMB Lending by 16%, upped their customer base by 23%, and reported a 31% increase in net profit (€22.6 Million) from the previous year.

Overall, the New Era of Finance is focused on building a balanced and sustainable economy around impact-driven SMBs. Rather than traditional banking, where profits are derived at all costs and very little money actually circulates into the real economy, the new frontier will be built on the bedrocks of technology, collective wisdom and transparency.

How do you see the future being financed?

+ Time For BMi

PLAN – the Business Model

The New Era of Business reports are focused on the future of important industries and include examples sourced from around the world.

Fashion forward – it’s a term typically used to describe the trendsetters in the fashion world, the fashionistas – but in today’s blog we are going to look at it from a different perspective, the future of fashion. Arguably the most unsustainable industry in the world, it’s time to put a new face on fashion and redefine the rules of the runway. Fast forward to a new era of fashion.

Fashion touches us all. The threads of the fashion world are sewn around us from our very first moments on earth. But the clothes we wear are not what they used to be. What started as a cultural tradition of artisan handiwork passed down through the generations has become a mass-market business of shipments being passed down the supply chain. The pressures of globalization has flipped fashion on its head – thoughtful fashion is out, fast fashion is in.

The time has come to redesign the system and move fashion forward. Within the wreckage lies an unprecedented opportunity to build an entirely new stable of brands who can bring sustainability to the world of fashion without sacrificing style and sensuality. Fashion forward begins from the bottom up.

Recently, we attended the second annual Beyond Fashion Summit in Berlin. The workshop brought together a series of experts, designers, and entrepreneurs from around the world to lead a debate about how fashion is evolving and what the future holds in store. The theme for the event was ‘Hypernature,’ a term loosely used to describe how sustainability, technology and fashion might interconnect as we move towards a new era of fashion.

While many new ideas and concepts were introduced, one theme remained constant, the industry needs to change – radically. The behemoths who dominate today’s fashion markets have built their brands behind a manufactured illusion of glitz and glamour without regard for the social and environmental consequences; a seismic shift is required. That’s is why in this post we are going to look at the future of fashion from three angles:

  • Raw Materials
  • Textile Production
  • What it Means to be Fashionable

In each part, we look at high-level examples of brands who are catalyzing the change. We will follow that up with a look at our Market Beacons, companies who we think are redefining what it means to be fashion forward. Then we will look at how to take action and turn the sparks we are seeing today into a full on fire.

Let’s start with the materials.

The Raw Materials

To reinvent the fashion industry, we need to start with the core components, the fabrics and dyes used to produce the clothes. The fashion industry generally has two options to choose from when it is selecting materials to use for its designs, natural and synthetic. Natural materials are sourced from the natural world and include fabrics such as cotton and wool, whereas synthetic materials are created using chemistry and include materials such as polyester and nylon. Once the materials are selected, the majority are then dyed using an array of chemicals, many which have toxic properties.

Just because some materials are natural and others synthetic does not mean that one is necessarily better than the other. On one hand, polyester, the most widely-used material, is synthesized using an energy-intensive process that requires large amounts of crude oil; cotton, on the other hand, grows naturally on cotton plants but requires a huge amount of water (2,000 L to produce the average T-Shirt) and large amounts of pesticides (10% of all pesticides and 22% of insecticides are sprayed on cotton globally). This environmental impact, coupled with the social externalities from these industries, is why we need to take a hard look at the materials used to make the clothes we wear everyday.

So who’s entered the market to start shaking things up:

People Tree : Fair trade and organic cotton

People Tree is an organization that is focused on bringing fair trade to fashion and helping to expose the realities that make the majority of the world’s biggest fashion brands so immensely profitable. Founder Safia Minney started her career in the advertising industry, but it didn’t take her long to see behind the curtain and realize what fashion was really about.

People Tree’s garments are produced using 100% organic and fair trade cotton from rural farmers in the global South. Cotton can be grown as a rotational crop, reducing water consumption by up to 60%, and without the use of heavy pesticides. The company, which started in Japan in 1991, has spread throughout UK and Europe, with over 450 Stockists and ever-expanding inventory of fair-trade artisan garments.


Rubia : Natural Clothing Dyes

Rubia produces 100% natural dyes derived renewable sources. The madder plant, which was used as a dying agent as far back as 1350 BC, is the primary agent used to create Rubia’s dyes; the plant was phased out of production last century as synthetic agents began to reach the market, but is making a comeback thanks to its environmental and chemical properties. The resulting dyes, which are produced in powder form, come in a variety of different colours and can produce a level of quality beyond that of synthetic compounds.


Ploughboy Organics : Waste to wearable

Ploughboy Organics is taking the waste from one of the world’s most controversial substances, tobacco, and turning it into clothing. Using their patent-pending technology, they are turning the waste from the tobacco plants into their Onatah Fibers and Avani dyeing agents. Scheduled to be released in 2013, Ploughboy is taking a waste from a previously unthinkable source and transforming it into a fiber with brilliant and enduring properties. The reused tobacco fiber contains 30% vanillin and has 29 colours that are lightfast, colourfast and meet all testing standards. Because tobacco can be grown anywhere where the tundra does not freeze, there is an abundant source worldwide.

+ Ploughboy Organics


While it’s not expected that we are going to suddenly return to 100% organic materials, or start making the majority of our clothes out of tobacco fiber, the transformation has to start somewhere. In the same way that only a few years ago organic food was seen as a high-end item, organically sourced materials may start out in higher-priced garments before becoming the norm over the long term. Here are a couple of examples of companies in the market who make it easier to source and evaluate materials:



a hip site dedicated to helping designers source sustainable materials from around the world

Blue Sign


a material rating company dedicated to tackling the problem of material inputs, they have created their own proprietary black, grey, blue rating system to help brands manage and control the inputs in their production process.

Textile Production

Once the materials have been produced and the designs selected, the clothes go into production. While it may be natural to assume that only a few exploitive brands would engage in child sweatshop labor, as Nike did in the ’90s, the reality is that the process is as common now as it ever was. Countries such as Bangladesh compete to be the low-cost textile producer and setup factories in slums where child workers work 100+ hour weeks for a barely livable wage. Fashion editor Liz Jones wrote a story in the Daily Mail two years ago, ‘The Real Price of your £5 jeans,’ detailing the practices of fashion megabrands such as Primark who exploit child labour to make fast fashion as profitable as it is.

The whole cycle of textile production needs to redesigned from the ground up, and that starts with transparency. Rather than outsourcing production to foreign countries and using child labour to pump out cheap, generic garments, we need to return to the era of the artisan and localize aspects of production. And with so many clothes already on the market, many old clothes can be recycled, upcycled or simply rebranded (ie. vintage) to give them new life.

IOU Project : The return of the artisan

The IOU Project is a new social enterprise created by Kavita Parmar that is designed to bring back the story to the heart of the clothmaking process and connect consumers to the garments they purchase.

By sourcing fair-trade garments from artisans in countries such as India, the company endeavors to decommoditize fashion by focusing on the supply chain. While currently selling their garments online and through trunk sales, they will eventually be trying to white-label their platform to major fashion brands.


Junky Styling : upcycled

Junky Styling is a UK company that deconstructs and reconstructs men’s garments, including suits, blankets and anything else they can source from local charities and agents. They then remake and remodel these old clothes into a sexy, sassy collection.

For those consumers who have treasured olds garments that they loathe to part with, Junky Styling offers Wardrobe Surgery, a process whereby they will take the old garments and restyle them into something completely new and unique. Junky Styling is transforming would-be throwaways into something worth showing off.


Remei : end to end transparency

Remei is a Swiss company that has been committed to fair trade and sustainable fashion since its inception. Using their own bioRe® philosophy, the company adheres to stringent social and ecological requirements throughout their entire production process, which is audited by independent institutions.

To take their process to the next level, Remei is developing an end-to-end online system to show consumers the traceability of each and every garment produced by the company, including production, transportation and distribution. Starting in mid 2013, a consumer will be able to buy a garment and scan a unique QR code on the label to see the origins of the product.



While it won’t be feasible for every fashion label to implement end-to-end transparency, or source 100% of production from artisans, it all begins with a step in the right direction. Examples of big brands who are incorporating these principles into their actions include:

Top Shop


In July of this year, Top Shop introduced it’s ‘Reclaim to Wear’ collection in it’s Oxford location in London. The new collection is made from upcycled materials from surplus stock and production offcuts in collaboration with eco-fashion label From Somewhere.



Last year, Patagonia, maker of high-end outdoor apparel and one of the most sustainable companies in the world, launched their Common Threads initiative, allowing customers to resell old Patagonia jackets online through a partnership with eBay. Beyond being a well-thought out move sustainability wise, it was also a brilliant branding move by demonstrating the durability and endurance of Patagonia’s products.

What it Means to be Fashionable

While it’s great in theory to create fashion that is in-sync with the world around us, it won’t matter unless we change the culture around fashion and redefine what it means to be fashionable. Nobody wants to wear clothes made from toxic materials using exploitive labour practices, and yet the majority of the clothes we wear are precisely that. Why? Because it’s cool to do so. Fast fashion is chic, it’s stylish and it’s cheap, in the same way that ordering a Big Mac is filling, delicious and light on the wallet. We feel good for a brief period in the moment and then regret it soon afterwards. Why do we do it?

To try and reach the (unobtainable) image of beauty and stylishness fed to us by the media. We are surrounded by sexy models whose photos are fixed-up on Photoshop to make us believe in flawlessness and fed celebrity endorsements that paint luxury as must-have social symbols. Lost in the process is the natural beauty of people, the importance of individual style and the connection to the real designers.

It has to change. Fashion should be fun, energizing and customized. The days of traditional tailoring and hand-sewn everything may be gone, but the old-school principles can be reapplied to make a new era of fashion come to fruition. Here are a few examples of what needs to be done:

Sustainable and Eco → Sexy and Stylish

Most people don’t want to buy something that screams ‘Save the Whales’ or ‘I am Eco,’ nor do they want to buy a wardrobe full of hemp clothes and carry a purse made of burlap. Fashion being fashion, is meant to be sexy and give people the confidence to step out everyday and do what they do best. Rather than striving to be ethical or eco, brands need to embed these principles into the brand, be transparent about their activities and focus on giving consumers what they want (stylish clothes).

Earlier this year, the Brazilian company OSKLEN launched its A21 collection in accordance with the Rio +20 Sustainability conference in Rio de Janeiro. Founder Oskar Metsavaht believes that the best way to advance the sustainability agenda is to embed it into the collection rather than letting it define it, and promote a mindset of consciousness about the world around us. Check out the funky collection below by one of the world’s premiere fashion brands (embedded above).

Mass-Market Generic → Customized and Co-created

The new era of fashion is all about customization and co-creation. To reverse the trend of fast fashion, brands need to get customers involved into the design process and build a community around a line of customized and creative apparel. Crowdsourcing certain elements of the production process will not only help develop more inspired designs, but also help create a deeper sense of connection to the clothes that are produced for everyone involved.

UK-based SketchStreet has created a platform to co-create design collections, which was built around the idea of ‘Let’s Do it Together.’ Everyday designers submit their designs to the site, which are then voted upon by the community. From there, samples are created, pre-orders are made and then the garments are sent into production. The new designs are then added to the company’s online Shop, making the SketchStreet collections fully co-created.


Model Mashups → Small Touchups

Many of the photos we see on billboards and in shops are no longer just moderately Photoshopped images, they are full on mashups. A few image touchups here and there might be necessary, like a pimple on photoshoot day, but to fully manipulate images to create a certain image of beauty is beneficial to nobody. The return of real models photographed as their natural self will help bring the expectations of what we need to look like down to earth.

Leni’s Models Management was the first ethical model agency to be launched. Former model Eleni Renton saw the effects that industry practices were having on young models and decided to create an agency around being natural. Beyond just finding the models contracts, the agency educates young models about how to manage themselves, eat properly and live life. The company’s mission is to ‘promote a more realistic image for women and reject the ‘size zero’ look.’


Market Beacons


Puma, known for its stylish sports apparel, has started to bare its teeth in the ultra-competitive shoe and clothing industries, but with a slightly different strategy than its competitors – transparency. The company has taken reporting on its P&L statement (Income Statement) beyond just the typical greenwash jargon, and shown some new metrics to demonstrate the company’s environmental and social impact. In 2012, they reported on the overall environmental impact of the company’s activities on their P&L, but in 2013 they will take it to a whole new level by reporting on the impact of each individual product and displaying the overall environmental cost information on the price tag.

Along with reporting on their products, they have several design initiatives aimed at reducing the collective impact. Two years ago, they launched the Clever Little Bag initiative (embedded above) in collaboration with renowned designer Yves Behar. In 2013, they will be introducing a line of biodegradable shoes and shirts. PUMA is pushing the envelope in the world of sport and lifestyle fashion and building themselves a sustainable advantage in more ways than one.

+ is a new Brazilian startup that is fusing together fashion with the social web to create a collaborative platform where users can create their own looks and style collections using a range of designer labels. Conceived by two former investment bankers as an experiment, the original site was launched as a gift to the duo’s wives in 2008.

As of June, the company had 1,000,000 users in Brazil, and raised capital earlier this year from Intel Capital to finance their expansion into the US. Users can create their own looks from a few million different labels, interact with other users on the platform and even dress up virtual models. The site is bringing the fun back to fashion and showing the enormous potential enabled by collaborative platforms.


EF (Eileen Fisher) Lab– concept store

Eileen Fisher is an elegant women’s fashion label based out of the US that has built a strong following through its focus on simple design. The designer launched an Eco Collection that uses a variety of organic materials sourced from diverse countries such as Peru. To expand the company’s impact, they have created several philanthropic initiatives to support women’s entrepreneurship.

To merge the company’s vision together, they opened up the EF LAB store in New York in 2009. The LAB is unique because of the product assortment it offers: new clothes, last season’s clothes, samples and recycled clothes. To incentivize recycling, the EF Foundation setup the Recycling Reward program out above), which rewards customers for recycling gently used clothes. Any profits from the Recycling program are donated to one of the company’s philanthropic initiatives. The EF Lab demonstrates how a combination of creativity and vision can come together to bring sustainability to the consumer level.


Catalytic Clothing

The future of fashion will include creative uses and applications of high-level technology. One promising technology is nanotechnology, an advance that enables scientist to manipulate matter at a molecular level. Catalytic Clothing is a new project based out of the UK that is striving to reinvent what’s possible with fashion by creating a fabric that can clean the air while being worn.

Started as a venture between designer Helen Storey and chemist Tony Ryan, it is a large-scale partnership between the University of Sheffield, University of London Arts and the London College of Fashion. The goal is to use photocatalysts on their Catalytic Clothing to break down pollutants in the air. These catalysts are activated in the wash cycle, and have been applied to the first generation of products in the Field of Jeans project. The idea is that multiple people wear the products, air quality can be vastly proved. Who said fashion is only about style?

+ Catalytic Clothing


Fashion forward begins with the individual. The choices we make when we buy clothes, the way we talk about fashion amongst our friends, it all adds up.

The greater impact, however, comes through entrepreneurship and the creation of new models to build a sustainable ecosystem. The Blue Ocean opportunity that lays ahead is enormous and can be approached from numerous different angles.

+ Time For BMi

PLAN – the Business Model

The New Era of Business reports are focused on the future of important industries and include examples sourced from around the world.

The New Era of Business begins – the walls of the insular, profit-driven corporation are falling and an open, demand-driven ecosystem is forming in its place. To commemorate the beginning of this occasion, we thought it was time to start writing about how to start shaking up the industries we love the most. As food is something that is so central in our everyday life, we picked it as the industry to write our first New-Era of Business post – it’s time to turn up the heat and spice things up!

Last week, while shopping in one of the mainstream Canadian supermarkets, we noticed something – one of the approximately twenty food aisles in the supermarket was titled ‘Natural Food.’ The thought struck hard – if this aisle is the Natural Food section, what does that make the other 95% of the food in the supermarket?

Problem #1: The majority of the ‘food’ that we eat is not natural

While pondering this troubling thought, we went to go pick up some apples from the produce section. Incredibly, the only apples that could be bought were shipped from another continent, this during a time of the season when local apples are ripening en masse.

Problem #2: Local production equates for a minimal percentage of the total

Craving more natural food, we went to another supermarket down the street. At this other supermarket, we were able to buy food that can safely be classified as natural, let’s call it whole food, and an abundance of local apples; however, filling up the shopping cart with ‘whole foods’ meant leaving the store with a significantly lighter wallet.

Problem #3: ‘Whole foods,’ or real foods, are more expensive than ‘non-whole foods’

With these three problems alone, it becomes very apparent that we need a radical shift in our food ecosystem. All of the examples used in this particular story are from Canada, but the underlying theme is visible in all the other parts of the world we have visited, just to different degrees. The world of food is dominated by megabrands (see the chart of who controls the food ecosystem) who care about one thing – the bottom line. The entire process, from the moments the seeds are planted in the ground to the moment we take the first bite, needs to be reinvented.

To jumpstart this process, we thought it would be good to look at our food ecosystem on three levels:

  • The Main Ingredients
  • Food Production
  • Food Culture

For each category, we will then look at a few counter trends and new ideas that we have seen or heard about during our travels around the world. At the end, we will list what we see as the market beacons, new businesses that illustrate where the market is headed, and talk about some simple steps to action and opportunities for collaboration.

Let’s start with the food itself.

The Main Ingredients

If we are going to begin to reinvent the food system, we need to know what we should be eating. The first step is to identify what foods we have enough of and which ones we don’t. By walking through most of the major supermarkets in the world, it becomes obvious that we are missing the main ingredients – real, fresh food.

To counteract this trend, there has been a lot of innovation in food from around the world. A few examples include:

the raw food movement on the West Coast of Canada

  • multiple grocery stores, cafes and restaurants have popped up that cater to this growing market. The food is prepared raw, as in uncooked, with the theory being that raw food is in its most nutritional state. Not that we are raw foodists, but if you have sampled any raw food you will notice that over and above anything else, the food is fresh;

Natural health products from Brazil

  • multiple products have appeared in supermarkets from around the world that come from Brazil. Coconut water, maté, acai, banana passa (ex. Ipanema Valley in Toronto) and a host of other products can now be purchased on grocery store shelves. Unlike most North American ‘natural health products,’ Brazilian products are shipped in a natural state (from what we have seen) – they are not cut with a bunch of sweeteners and substitutes or diluted down from their original state;

Other trends that are moving the dial, include a boom in the number of vegetarian and vegan restaraunts, the demand for organic (ie. pesticide free) products and the marked increase in dietary ailments (ie. diabetes, celiac, etc.) which have created a whole new line of diet-specific products (ie. gluten free, sugar free, etc.)

While these trends are good signs, they have yet to reach scale and be brought to a level where prices reach ‘normal levels.’ To hit this level, the next big shift needs to be in food production.

Food Production

Using the apple context, where it is easier and cheaper to buy an apple from a country across the world than from a farmer down the road, it becomes obvious that the whole food-production ecosystem is the opposite of the way it should be. Rather than creating a distribution system that caters to small-scale local production, we instead have one that was built for industrial global agriculture.

Of course big business would argue that this is the only way to effectively feed the planet, but at this point they have lost all credibility. We need to shift the production power back to the local producers and create an environment where global food distribution is reserved for non-staple foods, like chocolate and coffee. A few trends that signify the market is starting to move in this direction, include:

The boon in local farmer’s markets

  • Farmer’s Markets are growing increasingly popular around the world, as people start to reconnect with their food and look to buy straight from the source. We saw bustling weekend markets in Brazil, London and all over Canada, as people can’t seem to get enough of farmer-fresh produce and meats;

Local Food Coops

  • Members of local communities are starting to pool their money together and buy large quantities of local food from producers in advance in order to get better prices for the members of the community. These coops are non-profits run by volunteers, which helps to ensure that all the savings from group buy are passed down to the community;

Origin of Food Marketing

  • Many new products coming to the market proudly proclaim their local roots, as indeed local is becoming the most valuable adjective when describing food. It makes sense, as for something to be fresh, it has to be local. Naturally, there are problems related to misleading labeling and false marketing, which is where technology becomes a factor. The Localize initiative in Alberta, for example, creates a Local score from 1 to 10 and has a QR-code on the label (pictured below) for people to see a profile of the food producer.

Other trends include the creation of online local food networks, where local producers connect via social media to exchange information and host events, public campaigns against multinational agriculture giants (ie. #StopMonsanto) and creative projects like the Tiffin Project in Vancouver to help make it more affordable for chefs to buy local ingredients in restaurants.

It’s clear that there are many forces that are acting to restore local food production and encourage more businesses to source local ingredients. But it’s not enough, unless we start to change the way we talk about food and how we eat.

Food Culture – The Way We Eat

Every place around the world has its own food culture. In South America, it’s about eating with friends and enjoying life. In Europe, people love to take to the streets and catch up with friends at a local restaurant. In North America, people enjoy their comfort foods and favor convenience. Regardless of where you go, however, there are some similar underlying themes to the mainstream eating culture:

  • people have lost their connection to food – very few people know where their food comes from
  • people buy on price as a standalone factor – many people buy the cheapest food without analyzing other tradeoffs
  • people don’t ask questions about food – most people will not question anything about the nutrition or sustenance of their food

We need to change this culture and start creating environments where people feel good about the food they are eating and the people they eat with. Food should be a celebration, it should be communal and it should fuel us to do big things. Trends that illustrate this transformation include:

Community kitchens at the U of T

  • students at the University of Toronto coordinate, cook and serve vegetarian meals, all for a low price ($4). The only kicker is that you better get there early, as there can often be lineups out the door (ex. the Hot Yam (pictured below), the Harvest Noon);

Communal tables in London

  • many cafes and newer restaurants in London have communal tables to encourage people to eat together in a more communal fashion;

Serve the other person in California

  • at an Italian restaurant in Monterrey, California (not sure of the name), people serve one another to promote a spirit of interaction and portion control.

Other encouraging trends include, movements like the Slow Food Movement, food ‘activist’ chefs such as Jamie Oliver, and an increasing curiosity, especially in the younger generations, about the food we are eating.

Market Beacons

To illustrate the collective impact of all these trends, we have put together a list of four ‘beacons’ who we think illustrate where the food market is going.

The Peoples Supermarket – democratized food – London:

The People’s Supermarket is community-based supermarket with a mission to redefine the whole local-food buying experience. It functions as a cooperative, where members pay a 25 Pound annual fee and commit to four hours per week of volunteer service. Make no mistake though, it is for-profit venture, but returns are distributed back to community members in the form of discounts and price reductions. Every month, members attend an AGM (annual general meeting) to decide on aspects of the management of the business, while a Committee or Board makes the big-picture decisions.

The mandate of the People’s Supermarket is to provide people with local, sustainably-produced food at affordable prices. The founders of the People’s Supermarket saw a need to create a more vibrant, ethical and personal place for people to buy their food, while at the same time solving common supermarket problems, such as food waste, unmotivated employees, etc. In essence the People’s Supermarket has built a vibrant community of people around food and created a model for a new era of supermarkets. to read about the Secret Sauce The People’s Supermarket.


LYFE Kitchens – organic fast food – USA:

LYFE kitchens wants to reinvent fast food one brussel sprout at a time. LYFE (stands for Love Your Food Everyday) was founded by the former chief operating officer of McDonalds, Mike Roberts. According the (AMAZING) Wired Magazine article (click to read article):

“Lyfe’s aim is not just to build a radically sustainable, healthy brand of fast food. The Former Golden Archers hope to transform the way the world produces organic ingredients, doing for responsibly-grown meats and veggies what McDonalds did for factory-farmed beef.”

The first ‘prototype’ store opened a year ago, but the goal is to expand to 100’s of locations in five years. Expect to see meals with 100% local and organic ingredients, along with local beer and wine. They are bringing fast food from the dark days of frankenfood into a new era of freshness.


Credibles – crowdfunding local food businesses – USA:

Credibles is bringing crowdfunding to the local food markets, but with a twist. Rather than simply donating to a local food producer in exchange for a reward, contributors receive Credibles – a currency that can be validated at any of the local enterprises funded on the Credibles platform. Initially, the Credibles will be distributed as a printable coupon, but they will eventually be upgraded to a mobile currency.

The site is launching in Beta mode in the New York and San Francisco market that hopes to sprout a new-era food ecosystem using patient-money principles.


Real-Time Farms – Future Food Guide – USA

Real-Time Farms is a ‘crowdsourced nationwide food guide’ according to the site. It combines the power of the crowds with the passion for local food and provides a visual representation of local-food producers across the US.

On the Real-Time Farms site you can see locate local artisans, markets, farms, eateries and everything related to the local food scene. The site is an index for the next-generation of food producers, which prompted the Huffington Post to ask ‘is this the Future of Food Guides?’



Let’s kickstart this process. From what we buy in a given day at the supermarket, to what we order at a restaurant, to how we talk about food with our friends, it all makes a difference. But entrepreneurship is the real arena for impact.If you are looking to fund a food enterprise, think about crowdfunding (ex. below) and check out our research on crowdfunding strategy:

+ Crowdfunding Strategy – Summary

And remember, while organic+ is important, the real potential for shaking up the food industry lies in Business Model Innovation.

Are you making a move to shake up #RealFood?

+ Time For BMi

PLAN – the Business Model

In “The Blind Men and the Elephant” blog, I explored how businesses conduct market research to validate assumptions. In speaking with a number of entrepreneurs who have been through the process of trying to validate an idea, I gained some great insight into what techniques people use. In this blog I want to examine what the purpose of market research really is – in other words what is the end goal.

During discussions with these entrepreneurs (mostly with tech products), I wanted to understand how they validate if there is a market for their product. What I found is that many people just throw a new product out there and attempt to get feedback from users as quickly as possible.

Some of the techniques for conducting market research and collecting customer feedback were:

  • Craigslist ads
  • Website blogs
  • Email surveys
  • Random coffee shop interviews
  • Social media applications (Twitter)
  • Focus groups

A more sophisticated technology company I spoke with created a whole back-end analytics application to capture real-time customer data from users. In contrast, others don’t do any at all.

Naturally, it depends on whether or not the product is meant as a B2B or a B2C concept, as it is often more difficult to conduct market research for a B2B concept. Whether it’s B2B or B2C, it is important to understand the rationale behind market research.

The end goal of market research is to determine if your product can add enough value that it merits it’s own business. Without market research, you won’t know whether your initial vision is grounded in reality. Without a vision, you won’t be able to determine how to conduct market research because you won’t know what to look for in the results.

When designing market research strategies, it is important to understand who the end-user is and how they operate. It is also important to uncover insights that go below the surface, as many users will not be able to articulate what they want. It is a strategic process and one that requires some thought. Once you understand why you are conducting the research in a certain way, you will know what results to look for and how to measure them. Without metrics and insight, market research can be a fruitless exercise that leads to unusable feedback.

At Lumos, we believe that market research is valuable if it is conducted with the right goals in mind. Excessive market research often leads to more confusion than clarity, that’s why we keep it simple and focus on what really matters.

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A couple of weeks ago I asked the question, how do you validate your ideas? The question generated some lively discussion and many people shared some great insights. Of all the feedback I received, through verbal discussion and on our blog, one thought stuck out amongst all the others.

“Asking the market what it needs is like blind men describing an elephant.”

This insight was shared by Paul Sullivan in one of the comments on our last blog. Today I wanted to dive deeper into the meaning behind that statement and try and zone in on what the purpose of market research really is.

The story of the blind man and the elephant is described on Wikipedia as the following:

“In various versions of the tale, a group of blind men (or men in the dark) touch an elephant to learn what it is like. Each one touches a different part, but only one part, such as the side or the tusk. They then compare notes on what they felt, and learn they are in complete disagreement. The story is used to indicate that reality may be viewed differently depending upon one’s perspective, suggesting that what seems an absolute truth may be relative due to the deceptive nature of half-truths.”

How does this relate to idea validation? It suggests that people will only be able to perceive a portion of what they want, maybe a certain feature on a software product for example. Since they will not be able to envision the entire product, it is not possible to identify whether or not a person, or an entire market, will buy a product through simple market research techniques. Everyone will have a different perspective on what they think it should be, so there is no finality in validating an idea purely on market research.

Paul goes on further to suggest:

“you have to put it out there and get the market’s reaction”

In other words, people will not know whether they want something until they see it.

Therefore, entrepreneurs need to envision what people want and come up with something that meets the needs of a certain market using their own intuition. There are, however, a number of ways to reduce the uncertainty created by relying solely on one’s own intuition. Market research, which can mean different things for different entrepreneurs, can be used to uncover insights that reduce uncertainty.

At Lumos, we believe it is essential to ‘Find Here’, or understand the market forces shaping your business, including customers and competition. Other entrepreneurs, however, utilize market research in different ways.

The question is, how do you conduct market research to help validate your assumptions?

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Our days are defined by a series of interactions with objects – from the moment we wake up and hit the snooze button on the alarm clock to the moment we flick off the light and say good night. Each day we interact with a countless number of products that were all designed with a purpose at some point in time. In some ways, these objects define our existence, as without them we would not be able to do what we do best.

Each product, service or process ever created was designed to theoretically enhance a group of people’s lives in some way or another. But how many of them actually do?

The simple truth is that countless numbers of products miss their target completely and end up flopping. While there are numerous factors that could potentially derail a product from becoming successful, in many cases it comes down to design.

When people engage and interact with a product, what they are really doing is immersing themselves in an experience. Though often times we think people buy products for the bells and whistles, the underlying reason behind their purchase is actually for the core benefits they derive from the experience.

Let’s say that a product can be designed in two potential ways:

  • As a complex, feature-laden product that addressed all of the possible needs of a broad market;
  • Or as a simple, easy-to-use product where the benefits to a smaller group of people were immediately visible.

In this scenario, the simple product will win again and again.

A great example to look at is software. Many of the software products that we use on a day-to-day basis are simple, clean, intuitive and as easy-to-use as possible given their functionality (I know there are a lot that are not like this as well). Think about applications like Skype , Firefox and Dropbox. They all provide a lot of value without sacrificing simplicity. What we don’t see, however, is the countless number of applications or software products that have not made it because people didn’t buy them. Each of the software examples above were not the first products to come out in their respective product classes, but they were the first to provide outstanding utility to users by making it easy to derive benefits from using the product.

So how can a company nail its product design?

There are a number of world-class design consultancies that are often worth their weight in gold. But even before taking that step, a company should try to understand its market. This does not mean conducting extensive market research to try and find what people want. Instead, a company should try to discover the benefits from the products already being offered, and how its product can add more value to the user experience. This is something we do here at Lumos.

With this insight, companies can begin designing a product that matches the needs of the market. Simplified, thoughtful, well-designed products have the ability to break open new markets, make the competition obsolete and produce margins that bolster a company’s bottom-line. The value of well-designed products that maximize user experience is felt by everyone throughout the whole product pipeline – from the designer all the way down to the end user – and that’s the power of design.

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Right now, thousands of individuals around the world are mulling over and debating whether or not to launch their new product into the market – the question is, how are they validating their decisions?

For some, it will be a gut instinct: insight crystallized purely from an assortment of thoughts and feelings based on observations.

For others, it will be validation through market research: a consensus validated by the responses of numerous potential/current customers.

And for others, it will be the result of collaboration: a collection of iterations to a unique idea by a number of key individuals with specific expertise.

Malcolm Gladwell, for example, would say go with your gut instinct. An interview with Business Week reveals that Gladwell believes businesses should be wary of three things:

“Relying on too much information to make decisions; asking people to explain why they made a decision that was instinctive; and believing in market research.”

Many current businesses, however, are making their decisions to bring something to market based on market research. It is commonly accepted in the business community that there should be some concrete market research to validate a concept before it is brought to market.

If, on the other hand, you were to ask Apple how they generate their ideas, they would tell you it is a result of collaboration. Pragmatic Marketing’s article on Apple reveals that for any new feature or design, Apple takes a group of designers, creates ten ideas, cuts it down to three ideas, and finally to one. According to Steve Jobs, they do not do market research. They hire really talented people and turn them loose — they rely on multidisciplinary collaboration from within the organization for all their groundbreaking ideas.

Now, assuming that at the moment of truth you rely on one of the above options more than the others to validate your decision, the question is …

How are you validating your business ideas?

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