These Founders Want a More Ethical Business Structure for Startups

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I discussed for a long time that Venture capitalists get excited about climate change it’s scary and that the goal of a startup is to cease to exist. But I haven’t been particularly successful in describing what startup founders can actually do to build a more sustainable business in a world heading toward a climate crisis.

Enter Amit Paul and Nils von Heijne, who have spent the last few years thinking about how businesses are built and whether an alternative approach can be taken. In their native Sweden, the duo developed an alternative organizational structure that aims to redefine the way we think about sustainability and regenerative business practices.

Called one regenerative community organization (RCO), this new organizational model is not only a theoretical framework; it aims to be a practical approach to embedding sustainability at the heart of operations. By integrating regenerative and circular principles into the business structure, this model aims to set a new standard in corporate responsibility and green management.

The framework has already received provisional approval from the Swedish authorities when the first company to incorporate this model was established. The company, Innrwrks, was founded by Paul and von Heijne and attempts to serve as a model for how other startups can build on the same model.

Sweden’s provisional acceptance of the RCO model represents a step forward in the global movement towards sustainable and regenerative business practices. It provides a government-backed model that businesses can look to to create more sustainable businesses.

An idea

The genesis of the RCO model dates back to a series of discussions between Paul and von Heijne in business school, during which they explored the limitations that existing business models face when dealing with pressing environmental challenges. They recognized that while there was a growing movement for sustainability, most startup efforts remained superficial and failed to address the root causes of ecological degradation.

With a background rooted in environmental science, Paul says he has long championed practices that minimize damage to the environment and contribute to its restoration. His career has been marked by efforts to bridge the gap between environmental management and profitability – he is a member of the Environmental Defense Fund and was part of CodeGreen Solutions, which aims to help real estate borrow a a more low-carbon path.

Meanwhile, von Heijne is a serial entrepreneur (we counted eight co-founder titles on his LinkedIn) of a wide range of companies that come together on problem spaces that act as catalysts for change. He is also an early investor specializing in sustainable startups (within Svärd von Heijne).

“I was very stuck in the culture and the narrative of business school,” von Heijne said. “We’re here to build things, then scale them as quickly as possible, and then someone makes money. That’s the end of the story. At some point, it became about more than pleasing investors or making myself look like a success to others,” he explained.

The RCO model

Paul and von Heijne told TechCrunch+ that the RCO model draws inspiration from living systems theory, which emphasizes the importance of designing organizations that are adaptive, resilient, and able to thrive in harmony with the natural world.

According to Paul, the RCO has three unique parts. Part of it is the constitution, or what the co-founders call source code – the horizon toward which a company looks. “This horizon can never be an answer; it is a question that represents the constitution of the organization and which guides us,” he explained.

The second part is an association. “The association upholds and defends the purpose of the company and helps keep it on track. He can’t tell the company what to do, but in a few cases he can tell the company what to do. not do,” he added.

The third part, which underlies the other two, is linked to the business life cycle. “A startup is not an eternal startup: the logic of the start-up must change,” emphasizes Paul. “In the beginning, a startup has to acquire a ton of resources, but at some point it will start to get more complex and form structures. This is when it becomes a “real business”. The third aspect of RCO helps us view the company as a growing and evolving organism.

By drawing parallels between natural systems and organizational structures, the RCO model advocates that businesses emulate the resilience, adaptability, and regenerative capacity of living systems. This involves creating efficient and adaptable business operations that can contribute positively to the ecosystems and communities with which they interact.

The two pillars of the RCO model are regeneration and circularity. Regeneration focuses on improving and restoring ecosystems, communities and natural resources. Businesses that follow this framework are designed to contribute positively to the environment and go beyond sustainability to actively improve ecological health and social well-being. Circularity is the concept of reducing waste and pollution, keeping products and materials in use, and regenerating natural systems.

Put it into action

Implementing the RCO model requires businesses to fundamentally change the way they conceptualize their role in society and the environment. That implies :

  • Design with purpose: Businesses must redefine their purpose to align with regenerative and circular principles, ensuring that every aspect of their operations contributes positively to the environment and society.
  • Create global value: The RCO model emphasizes value creation in economic, environmental and social dimensions. This involves rethinking the business model to optimize sustainability and resilience.
  • Adaptive governance and leadership: The RCO model requires adaptive governance structures and leadership styles that respond to changing environmental and social conditions.
  • Commitment and collaboration: The success of the RCO model relies on engaging stakeholders and promoting collaboration across sectors and industries. By working together, businesses, governments and communities can drive the transition to regenerative and circular economies.

Technology plays a crucial role in implementing the RCO model. From advanced materials and renewable energy to digital platforms and circular economy technologies, innovation is essential to implementing the principles of regeneration and circularity. Businesses must leverage technology to design products and services that are not only sustainable but also regenerative in nature.

The duo’s company, Innrwrks, aims to show how businesses can thrive economically while actively contributing to the restoration and revitalization of natural ecosystems, as well as promoting social well-being.

Not an easy path

As expected, the journey to innovation and implementation of the RCO model has been fraught with challenges, ranging from legal obstacles to cultural resistance.

One of the main challenges was navigating the complex web of legal and regulatory requirements, the co-founders told TechCrunch. Corporate law is rarely equipped to accommodate corporate structures that prioritize environmental and social regeneration as fundamental operating principles.

Another set of significant barriers arises from cultural norms and ingrained mindsets that favor traditional, linear business models. Convincing business leaders, investors, and even consumers to embrace a model that fundamentally redefines success is a work in progress.

It is encouraging to see some countries open to change at the level of business structure, but on a global scale the fight is likely to be difficult and arduous. Challenges will include entrenched business paradigms, overcoming regulatory and policy hurdles, and securing the investments needed for the transition. However, these challenges also present opportunities for innovation, collaboration and leadership.

My main concern is whether this model introduces new risks for businesses. Early-stage startups are already risky enough, but if an RCO could potentially block an exit opportunity (for example, if a less scrupulous company wants to buy the startup), it could prove to be a poison pill for a potential investment in venture capital.

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