How to Raise Funding Without Selling Out
Change.org, the online petition platform which we recently named one of Inc.'s Most Audacious Companies, has landed $15 million funding from the Omidyar Network, as well as the impact investing firm Uprising. It's the first institutional investment Change.org has accepted since it was originally founded back in 2007. But make no mistake, assures founder and CEO Ben Rattray, this doesn't mean Change.org, a certified B Corporation that focuses on social impact, is selling out. Along with the investment, Rattray promised both Change.org's users and staff that he would never sell the company or take it public.
"We're making a pledge to our community and demonstrating that we're not kidding about being a mission-driven company that wants to build for the long term," Rattray told us, adding that's also why he announced his commitment to stay founder-owned and operated forever. "We're now beholden to our own public announcements about what we think is best for the company."
It takes a special kind of investor to agree to Rattray's terms, and he says he's found that investor in Omidyar Network, which is headed up by eBay founder and philanthropist Pierre Omidyar. Rattray says he first approached Omidyar Network back when he launched Change.org, but, he says, "They tend to fund later-stage companies, and so after that talk, we were heads down, building Change.org."
At first, the site was billed as "a social network for social change." It then morphed into a blog about topics relating to social impact, before Rattray finally found a business model that worked and transitioned the company one last time into a petition platform in 2011.
Since then, the site has taken off, adding 2 million new members a month. Though Change.org generated $15 million in revenue last year from sponsored petitions, Rattray believed that outside funding would help the company hire more engineers and scale the platform more quickly. While he says plenty of venture capitalists had approached him in the last year and a half ("It comes with the territory when you're growing as fast as we have."), few investors would entertain Rattray's unusual terms. Omidyar Network, he says, was the only firm he felt was both committed to Change.org's mission and willing to make a large enough financial commitment to help Change.org grow.
Because Rattray's committed to never sell or go public, he says, the most likely return for Omidyar Network will come in the form of stock buybacks or dividends paid out over time. He hopes Change.org can be a glowing example of the fact that there are more than two ways to satisfy investors.
"Right now, it's an exotic idea to say you won't have a traditional liquidity event. There's such reflexive adherence to the traditional mechanism of venture investment. It's not only not good for the world, its not good for these companies," he says. "It's almost impossible for companies to maintain the singular vision of the organization over time if they're not independent. We believe there's no one in the world that will be better at running Change.org than we are."