The time has come for a venture capital fund to provide the financial resources needed to do serious innovation in senior housing.
Every year venture capital firms bet hundreds of millions of dollars on new business ventures where around 40% of them will be total losses. They also know . . .
- Another handful will have modest success and generate at least some return.
- That a tiny percentage of them will yield fantastic amazing profits that will more than cover the loses.
Why Not Senior Living?
Here is my idea. I would like to propose that senior living companies and senior living capital providers should join forces and form a venture fund for innovation in senior living. For sure it wouldn’t be exactly like a high tech venture fund. It is impossible or at least improbable that any project or set of projects would ever have the kind of payoff a Facebook, Twitter or Google provided. On the other hand it is equally unlikely that any project would be a total loss. In truth the debt providers would only incur nominal risks and if the big national and regional players pooled a few hundred thousand dollars each, it is likely that additional money would flow from outside the industry. Own of the most critical aspects would be to have outsider, out of the box thinkers involved in the investment decision making process so that it does not devolve into just another senior living capital provider. In fact part of the operating rules would need to be that the fund would take a pass on anything that was ordinary, no matter how attractive the return.
The Big Wins
The potential wins are huge:
- It would be a way to take a serious look at providing a new housing model to meet the needs of those Boomers who haven’t saved enough to afford traditional senior living.
- We would likely discover some brand new better ways of doing senior living.
- It is likely we would see some hybrid approaches that might include home services, multigenerational and sweat equity models.
- It is entirely possible that we would end up with new amazing models of senior housing that would actually entice seniors who would otherwise stay at home into senior living communities.
- Finally, though perhaps most importantly if we created models that got more seniors out of the isolation that so often accompanies aging in place, it would be a huge huge win for seniors.
So what do you think?
The Rest of the Series:
- NIC is just like high school
- What if you had a big pot of money
- Why we are so slow to innovate – It is the fault of developers and operators . . . but even more the fault of capital providers – Part One Part Two This article
- Are there still great market opportunities across the country or are we heading into an era where there is danger of over saturation? – Yes – No – Maybe – Are there really any experts?
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