NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, September 21, 2015

Many technology start-ups aim to become “unicorns,” the companies that get valued at $1 billion or more on their way to probable vast riches. Yancey Strickler and Perry Chen have no interest in that.

As co-founders of Kickstarter, the popular online crowdfunding website that lets people raise money to help fund all manner of projects, including cooking gadgets and movies, Mr. Strickler and Mr. Chen could have tried to take their company public or sell it, earning millions of dollars for themselves and other shareholders.

Instead, they announced on Sunday that Kickstarter was reincorporating as a “public benefit corporation,” a legal change they said would ensure that money — or the promise of it — would not corrupt their company’s mission of enabling creative projects to be funded.

“We don’t ever want to sell or go public,” said Mr. Strickler, Kickstarter’s chief executive. “That would push the company to make choices that we don’t think are in the best interest of the company.”

Public benefit corporations are a relatively new designation that has been signed into law by a number of states. Delaware, where Kickstarter is reincorporating, began allowing public benefit corporations in 2013.

Under the designation, companies must aim to do something that would aid the public (such as Kickstarter’s mission to “help bring creative projects to life”) and include that goal in their corporate charter. Board members must also take that public benefit into account when making decisions, and the company has to report on its social impact.