Written by Moira Were (AM)
Exit strategies for start ups tend to be thought of in terms of IPOs – initial public offering – where a company floats on the stock market by selling shares to investors. Those investors can be institutional and non-institutional, the iconic mums and dads or big end of town or a mix of both. Another way start ups exit are through mergers or acquisitions. This approach often happens when companies are looking for complimentary skills, values and/or relationships. It also helps sometimes to get a product to market or incubate and inoculate bigger companies in development phases. And then there are start ups not interested in exiting and grow and stay independent and re-invest their profits back into the business without a distribution to share holders or through selling the company.
But there are other ways to exit…. and that is where community wealth building comes in. How about the exit to producer-owned, or the exit to employee-owned ?
An initiative that might start in research in a university serving producers or perhaps an industry body develops intellectual capital, maybe a product or tool is created through the process that has potential to be commercialised can then be co-owned. There are examples of this emerging from the challenges of climate change and shifting markets in agriculture, food systems and viticulture. The potential for these instruments to be owned by the producers is firmly on the agenda. Producer owned co-operatives and mutuals are on the rise and a real option for start-up exits.
Scotland has created a public policy environment to support exits, including succession plans for existing traditional businesses to employee ownership. They are planning to increase the number of Employee Owned businesses five fold by 2030. Incentives include tax-free thresholds and incentives, business capability support and development. There are early signs this is particularly helping family founded businesses where succession is an issue.
In an example from Australia, Greater than Learning start up are looking at converting their business into a platform co-op and this is a genuine community wealth building strategy. They are seeking to generate:
- An organisational structure with shared ownership and democratic governance. One that incentivises member contributions to design the platform tech in a trustworthy way and support the whole ecosystem in learning
- Mechanisms for the data we all generate through interactions with the platform to be managed by the community in a democratic way (i.e data trust with open and closed data)
- A pathway for values aligned individuals and organisations to combine resources, expertise and capital to increase the likelihood of positive social impact at scale
- A method for organisations that are currently competing for share of mind, heart and wallet to join forces
- Better quality and more affordable learning experiences and capability uplift programs to members in their journey to design trustworthy products, services and organisations
- Infrastructure to support members in delivering their expertise to global clientele, and
- A way for surplus financial resources to support a democratically managed community fund for the purpose of community projects
Cofounder of Greater than Learning, Nathan Kinch says,
“this pathway to being a platform co-op will build the foundations for community wealth building and bring more trust, transparency and responsibility to a new system, rather than trying to retrofit or reform an existing system.”
Ethical Fields is playing the role of mid-wife for farmers creating a Protected Habitat mutual. Farmers can produce “food and fibre” and Environmental Goods and Services (EG &S) and with encouragement, financial and policy infrastructure and innovative ways of working together as well as the tired and true methods of mutuals, can be recognised and rewarded for both.
The startup community full of a generation of humans looking for ways to build the kind of world they want with values that are reflected in the business systems, supporting SDGs, EG &Ss, principles of democracy, community, inclusion and equity might find the answer in community wealth building approaches.
If you would like to know more about our way of doing that at Ethical Fields get in touch.