High Risk Venture Investment in Co-operative Start-ups
I'm always being told that there is no shortage of available finance for new co-operatives. And yet what I see on the ground is that while there are some ways to access some limited grant support for early stage projects some of the time (and if the project happens to meet the criteria of the funder), and no shortage of fairly pricey debt finance for those that are in a position to repay, there doesn't yet seem to be anything around that might offer something akin to what we might in the private sector call angel investment. I'm thinking about relatively high risk investment in new-start cooperatives, with the potential for a high return over time. Where a VC would take a hefty equity stake and be looking for a high value early exit, I'm thinking instead of a repayment curve where the investor could potentially still get a hefty return, but over a much longer timeframe, giving the co-op a good long runway to build a sustainable business model. The payments come out of profits rather than revenue. And of course the investor doesn't have to demand a 3x or 5x return: many of the people that put their money into ICOF weren't interested in a return, they just wanted to see good things happen.
A couple of examples of investment firms that are doing this sort of thing already that I've come across are: https://earnestcapital.com/ and http://purpose.capital/en/ If you look at the companies that Purpose ventures has supported, you'll see at least three that - in my view - are really close to the co-operative economy in terms of their values and ethos: Open Collective, Sharetribe, and Coliga.
I would be really interested in your thoughts on this idea. Is there a gap in the market. Is the paucity of new co-op startups in part as a result of the lack of early stage risk capital?