The B Corp Revolution: Investing from the Heart
(3BL Media, Just Means)- A 'B Revolution' has begun: investors like B Revolution Capital are drooling over B Corps, a certification for companies that want to benefit society as well as their shareholders. B Revolution Capital says investing in B Corps is “not just a moral duty — but an opportunity to mitigate risk and generate an economically sustainable competitive advantage. In game theory, those who defect may achieve short-term wins, but those who cooperate perform better over the long run. Our services help funds focus on investing in businesses with practices that collaborate with stakeholders to create shared value.”
B Revolution Capital is a membership of wealthy, accredited investors who help fund B Corps in their forming stages. B Corps companies can apply for the opportunity to pitch to B Revolution Capital members only if they meet specific requirements including a data-driven business plan and can identify a high growth market opportunity.
B Revolution Capital fosters the B Corp community by motivating social entrepreneurs with start-up capital. B Corp beneficiaries of B Revolution Capital investment include Picture Healing, which won the first pitch competition this year and took home $1,000 in cash and nearly $5,000 in goods and services as well as a guaranteed spot to pitch for $20,000. The triangular relationship between B Lab, the nonprofit that created and awards the B Corp certification, B Corp and B Revolution Capital has created great synergy, a learning community, in the social business movement. B Revolution Capital investors stand as stakeholders in the company, and, according to the B Corp certification regulations, remain the only stakeholder entitled to bring a legal action against the corporation or its directors. As with traditional corporate structure, any financial stakeholders must be considered in the decision making process of the B Corp.
B Revolution Capital is not the only investment group wanting to expand their portfolio. A growing community of investors like Union Square Ventures and Generation Investment Management recognize that increased transparency reduces transaction costs and risk for investors, and, when third party standards are used to generate these reports, creates the comparability that will help the impact investing marketplace reach its full potential. Albert Wenger, an investor from Union Square Ventures, has spoken about how the Benefit Corp lets companies put social objectives right up front.
"They put them in their charter, right next to shareholder value, on equal footing. Most importantly, it [the B Corp] empowers investors to hold founders and management teams for actually pursuing those things [social objectives]. Another aspect is how easily it makes it for companies to publish their financial performance and to see how they are performing. It's that combination of having solid legal foundation and increased transparency that can create a new market- a market where we can fund social innovation as much as we have been funding technological innovation. And as investors, we are very excited to participate in that."
During Delaware's legal incorporation of the B Corp certification into state legislation, Wenger continued. He argued that it's not only the Occupy Wall Street movement who is concerned with the social problems of the world, but "business people too." Wenger also laid out the incentives for investors who incorporate B Corps into their portfolios. "It mitigates risk, reduces transaction costs, creates additional rights to hold management accountable, and accelerates the growth of a big market opportunity to meet the needs of people who want to invest to both make money and make a difference."
Sources: B Lab, B Corp, You Tube, B Revolution Capital.