So often, women entrepreneurs tell me that they don’t think they can bring in money for their business from outside investors, but I am here to tell you why you can!!!
Attorney & Creative Capital Queen Jenny Kassan talks about why Venture Capital models are not the right way for 99% of businesses to grow. Join the #WeEconomy and find investors for your business who love you, believe in what you give to your community, and want to see you be successful!
The tale begins in 1978 when two partners, Ben Cohen and Jerry Greenfield, founded a gourmet ice creamery in a renovated gas station in South Burlington, Vermont. Ben and Jerry ran their business so it was fair to its employees, kind to the environment, and kind to the cows who provided the raw product they used to create their ice cream. They called their pursuit of both profits and people the “double dip.” Their slogans such as “Peace, Love, and Ice Cream!” made them poster children for “hippie” corporations — in other words social enterprises, companies that make a positive impact on the world while also making money.
Initially, Ben and Jerry offered stock in their company to Vermont residents only using a Direct Public offering. The idea was to “spread the wealth” to their immediate community. Following a national stock offering in 1985, Ben & Jerry’s Ice Cream established a foundation and committed 7.5% of its annual pretax profits to fund it. Cohen and Greenfield also devised a simple three-pronged mission statement in which they pledged to manufacture the world’s best ice cream, to run a financially successful company, and “to make the world a better place.”
Ben & Jerry’s Ice Cream continued to build its business on the bedrock of its social values. The company sourced its ingredients from regional organic dairy farms. It only used milk that did not contain artificial growth hormones. It even went to court for the right to label its ice cream hormone-free. Then it developed chemical-free containers, and made fair-trade and organic ingredients priorities in their manufacturing process. It also took steps to reduce its trash output, creating a more sustainable overall carbon footprint for its operations. It opened scoop shops in inner city neighborhoods for the purpose of creating jobs for low-income community residents.
In other words, the mission the company’s founders was having a major positive impact.
But in 2000, Unilever, an Anglo-Dutch consumer goods conglomerate, offered to buy Ben & Jerry’s Ice Cream at 25% over the company’s estimated value. Cohen and Greenfield did not want to sell. They voiced concerns that Unilever would neglect if not abandon outright all the socially responsible aspects they had worked so hard to incorporate into their operations. However, as a publicly held corporation, Ben & Jerry’s Ice Cream was worried that they would be sued by their shareholders if they did not maximize shareholder value.
You probably know how this story ends. Ben & Jerry’s Ice Cream was eventually sold to Unilever for $326 million. Cohen and Greenfield each took multi-million paychecks as part of the deal. However, in a statement released to the press, the founders agreed that they would have preferred that their company remain independent.
Cohen and Greenfield’s fears were soon realized when Unilever began shuttering Ben & Jerry’s Ice Cream factories and laying off employees in order to create operational “synergies.” Unilever also reportedly took steps to decouple the corporation from its employees’ ideals. And customers worldwide have denounced the current quality of company’s product as far inferior to what Cohen and Greenfield had produced during their heyday.
Obviously this summarization glosses over many important details in the tale of Ben & Jerry’s Ice Cream. And of course this case has bred numerous dissenting opinions.
Frankly, to my mind, that isn’t the point. The point is this:
Aspiring social entrepreneurs need to plan early to prevent the forced sale of their companies!
For now, the best advice I can you is this: you shouldn’t go it alone.
It has never been more important for social entrepreneurs to have good coach, advocate, attorney, and strategist in their corner. I am all those things in one, and I would love to play that role for you!
Over the past 20 years, I’ve helped social enterprises structure and raise financing in total alignment with their long term goals and values. If you run a socially-responsible business or are thinking of starting one today!
Financial Success and Core Values
One of my favorite examples of an organization that has been able to raise millions of dollars of capital while staying in control and true to its values is Equal Exchange.
Despite posting enviable growth, this company has successfully retained its mission to create mutually beneficial relationships between farmers and consumers and support worker democracy and fair trade throughout the world.
Try some of Equal Exchange’s teas, coffees, chocolates, and fruit. You’ll be hard pressed to find goods of this quality anywhere else, and you’ll feel awesome that what you’re consuming is good for you and good for the world.
So what’s their secret?
How has Equal Exchange been able to grow and thrive for over 25 years while maintaining its mission and values?
Equal Exchange stipulates from the outset that investors have no voting rights. Investors are sufficiently confident in the worker-owners of the company to steward its resources. And investors have never been disappointed – they have received generous dividends every year, resulting in a return that exceeds a comparable investment in the S&P 500.
Notably, Equal Exchange’s structure prevents any investor or owner from profiting from the sale of the company.
Equal Exchange’s structure and investor agreements ensure that only values-aligned investors will be interested. The controls placed shareholder participation have never proven a hurdle to gaining investment. Demand exceeds supply every time. Equal Exchange offers its preferred stock.
Equal Exchange is not successful in spite of its commitment to its mission but because of it. A majority of investors and consumers want to do business with values-driven companies and Equal Exchange meets that demand.
There is plenty of room for more companies to do the same!