cooperative
Auto Added by WPeMatico
3 founders on why they pursued alternative startup ownership structures
There is no one-size-fits all model for building a startup.
At TechCrunch Disrupt, we heard from a handful of founders about alternative approaches to creating a sustainable company that ensures more than just VCs and early founders benefit from its success.
One way is building a cooperative, which Driver’s Seat CEO Hays Witt described as “a kind of corporate entity that both allows and requires that we return the majority of our profits to our members, and that our members have a majority of governance.”
Driver’s Seat helps ride-hail drivers use data to maximize their earnings. It works by requiring drivers to install an app that educates them about how the co-op collects and uses their data. In exchange, the app gives them insights about their real hourly wages after expenses and how those wages relate to different driving strategies.
“At a community level, what we do is sort of align everybody’s interest so that as gig workers come into our co-op, as they generate data, the value of that data in the aggregate gets higher and higher,” Witt said. “The dividends that we’re able to return back to drivers gets higher and also the kind of insights we’re able to give communities about work gets higher at the same time. So we kind of align all of our impact and mission goals. And our business model is through our co-op structure.”
That’s not to say Driver’s Seat does not create returns for its investors — investors are just one group of many that benefit from the company’s success. Witt said a desire for accountability made him decide to form a co-op.
“If we are always accountable to our co-op members, and our co-op members are gig workers, then we’re going to know that we’re accountable to the right things,” Witt said. “Now, we have investor members, too. We’re accountable to them, too. But our structure means that the gig workers always have at least that 51%. [ … ] it’s certainly not the only way to build a business. But, you know, for us, it was the way that we would build a business that would align with our mission of really changing the gig economy.”
Powered by WPeMatico
Healthcare co-op Savvy snags venture funding from Indie.vc
Savvy, a healthcare cooperative, has just raised an undisclosed amount of funding from Indie.vc.
Established as a cooperative that shares profits with its users, Savvy connects patients with healthcare companies and other providers looking to better serve people through products and services. Patients can take paid gigs that include tasks like interviews, focus groups and user testing.
Savvy is set up as a multi-stakeholder cooperative. Those stakeholders are divided into four classes: patients, Savvy employees, founders and investors. Up until now, Savvy has been entirely bootstrapped and sustained by its revenue, Savvy CEO Jen Horonjeff told TechCrunch via email.
“But as more and more companies are seeing that patient insights are critical to help their healthcare solutions find product-market fit, we need to scale up our operations to meet the demand,” she said. “This financing will allow us to expand our offerings, support more companies and, in turn, improve the lives of countless more patients.”
Cooperatives can oftentimes face trouble raising venture funding. That’s because their business models don’t generally align with the incentives of traditional venture capitalists, Horonjeff previously told me.
“I have to say a lot of investors are, first of all, not curious,” she said. “And those that are curious — and we’ve gone down the path with people like that — think we’re this cool new thing, but just don’t understand how it’s going to jive with the rest of their fund. So there aren’t great mechanisms in place to kind of bridge the gap between what people know and what the new economy could look like.”
For Indie.vc, which already takes a non-traditional approach to venture capital, co-ops fit into the firm’s vision. Indie.vc, which aims to be the last investment its founders need to take, is geared toward startups with founders who value preserving nationality and ownership.
As Indie.vc founder Bryce Roberts said in a statement, “Savvy represents everything we’d like to see in the future of impact business — shared ownership, diverse perspectives, and aligned incentives, tackling one of the largest industries on the planet.”
Powered by WPeMatico
The case for cooperative tech startups
When Uber and Lyft went public, it wasn’t the drivers who got rich — it was the executives, investors and some early employees. In an era when it has become clear that tech executives and investors are frequently the only ones who’ll reap rewards for a company’s success, cooperative startups are getting more attention.
Depending on how it’s set up, a cooperative model offers workers and users true ownership and control in a company; any profits that are generated are returned to the members or reinvested in the company.
Co-ops aren’t new: The nation’s longest-running example is The Philadelphia Contributionship, a mutually owned insurance company founded by Benjamin Franklin in 1752. In 1895, the International Co-operative Alliance formed to serve as a way to unite cooperatives across the world. Some colleges have student-run housing co-ops where cleaning, food preparation and other responsibilities are shared. Today, there are many well-known large-scale co-ops, including outdoor recreation store REI, Arizmendi Bakery in San Francisco and Blue Diamond Growers, one of the world’s largest tree-nut processors.
What’s novel, however, is applying the co-op model to technology startups. Start.coop, an accelerator for cooperative startups, is just one group trying to facilitate that practice.
Powered by WPeMatico
Not your typical startup: How being a cooperative drives our business and product development
Our French startup Digicoop is a remote-first worker cooperative. We started the company in 2015, based on our shared values and passion for technology. The goal was simple: make good products that will have a positive impact on companies. The road to funding, not so simple.
Due to our unique business model, which focuses on building a sustainable company, we had to forego venture capital and convince lots of players to take a chance. The effort paid off. Here’s a look at why we chose to be a co-op, how we got the funding and how it drives our product development.
Table of Contents
- Raison d’être
- SCOP: We’re all in this together
- Co-ops on the rise
- A new approach to management
- Sustainable growth
- Co-op funding, a tricky business
- Exit strategy? Not here
- Hitting roadblocks
- Round 1: Community help
- Round 2: Crowdfunding
- Vision of the future
- Last but not least: our products
Raison d’être
Unlike many startups, Digicoop wasn’t founded because of a particular product. Our story is a bit different. In 2015, a few friends and former colleagues came together to work on projects they were passionate about. Initially we didn’t know what those would be, but we quickly figured out the theme: collaborative work tools for teams.
Making that our focus was no coincidence. We recognized that the workplace was changing: distributed teams were becoming more common, and with that more transparency and an increased cross-team collaboration necessary. We became frustrated with traditional work tools and processes, as they were no longer enough.
We saw an opportunity to develop products suitable for the digital future, but that wasn’t our only driver. Being passionate about technology and the impact it can have on the society, we set out to build tools that could make a positive difference. The idea was to empower employees, not only managers.
Our shared values and vision of the workplace were the reason we decided to go against the grain and structure Digicoop as a worker cooperative (called SCOP in France), giving each employee a real stake in the company.
SCOP: We’re all in this together
Powered by WPeMatico