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The Innovation Blind Spot And How To Invest In The Right Ideas

Too often, VCs use shortcuts and pattern recognition towards investment decisions. This way of decision-making doesn’t always find the best ideas and is frankly bad for entrepreneurs who don’t fit the expected pattern. Ross Baird, President of Village Capital, believes that everyone deserves a shot at the American Dream, but are neglected by what he describes in his new book, The Innovation Blind Spot, as a “one size fits all” structure.

Ideas come from unexpected places, yet the decision-makers aren’t necessarily using the best structure to invest in ecosystems that spur economic growth and lasting impact. The Silicon Valley traditional method of investing doesn’t apply to any market or every situation. Baird states that innovation suffers from three major blind spots:

  • How we pick new ideas
  • Where we find new ideas and who we invest in
  • Why we invest in new ideas

Seventy-eight percent of traditional VC funding in the United States went to startups in three coastal states — Massachusetts, New York and California. Less than 1% went to startups founded by Black entrepreneurs and only 5% to women-led startups. To compound things even more, the average distance between VCs and their investment is 80 miles. Innovators aren’t just being overlooked, but entire markets. Baird states:

“And our investing culture’s blind spots are causing us to ignore places, people, and ideas in a way that stifles innovation and make it difficult for most entrepreneurs to realize the American Dream.” — Ross Baird, Author of The Innovation Blind Spot

Promising entrepreneurs and innovative ideas are constantly being overlooked due to an outdated model based on location, what they look like and who they don’t know.

One solution Baird suggests to close blind spots around entrepreneurship is by taking a page out of the college athlete recruiting pipeline. Baird’s grandfather was Vic Bubas, legendary hall of fame basketball coach at Duke University. In 1959, Bubas inherited one of the weaker teams in the country. One thing he noticed was that coaches tended to recruit players from their own backyards — one of the main reasons he couldn’t compete against local powers NC State and UNC.

Photo by Jordan Whitfield on Unsplash

Bubas realized he needed to innovate the college basketball recruiting pipeline and began recruiting players from across the country like the Midwest instead of his own backyard. Bubas was also one of the first coaches in the South to recruit Black players. The results speak for themselves — he took his team to the Final Four three times in 10 years and was “widely credited with pioneering the art of recruiting college basketball players.”

Baird argues that Bubas’ model for recruiting basketball players can be replicated and change the way entrepreneurs are recruited no matter where they are located. One of Village Capital’s approaches to inclusivity is through a peer-selection based investment model. At the end of each program, entrepreneurs evaluate each other and select two of their peers to receive capital from VilCap Investments and co-investors. The entrepreneurs decide who is most investable, not investors.

We, humble ventures, offer an alternative to the standard accelerator model by requiring our program startups to be physically present for only one week of our nine-week acceleration program. This inclusive approach alleviates the pain of entrepreneurs having to uproot and relocate for an extended period of time away from their family and home where ever they happen to be based. We leverage our model and virtual programming to reach, train and connect entrepreneurs across demographic and socioeconomic barriers.

The ideas that will solve our problems are hiding in plain sight.” — Ross Baird, Author of The Innovation Blind Spot

The Innovation Blind Spot is wonderfully written and provides a roadmap of how to back the right ideas. The book also illuminates stories of founders, investors, foundations and local governments using unique methods to create diverse ecosystems for growth. When new stakeholders get involved in the conversation, we’ll begin to see a new pattern for innovation. I highly recommend anyone that wants to positively contribute to the innovation economy to read this book.

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