Backing the Good Guys
More investors want to back companies doing good in the world.
But what qualifies as “good” varies from one person to the next. Vanguard’s Social Index Fund invests in Wells Fargo, Pepsi, and ConocoPhillips. Probably not most people’s idea of moving society forward.
That’s why we’ve been excited about certified B Corps. A B Corp is a for-profit company that meets a list of objective social, environmental, and transparency criteria, and is publicly held accountable to factoring social benefits into its corporate decision-making.
Three years ago, we partnered with investing platform CircleUp to create a fund that invests in B Corps. To my knowledge, this is the only fund that exclusively backs the B Corp community.
We did this for two reasons:
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We want to prove that companies with big social missions also make great investments. The core of Collaborative Fund’s mission is a belief that the companies who perform the best over the next generation are companies that do the most good, as they’ll attract the most attention, attract the best employees, and align with long-term customers. Having a B Corp certification gives companies an explicit greenlight to align the interest of all stakeholders, which we see as a competitive advantage in today’s myopic economy.
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We want to use CircleUp’s data and marketplace to have a better view of the B Corp community. CircleUp is a platform that connects angel investors to consumer-product startups. It has a unique perch into the consumer startup market that few other investors enjoy. While technology startups tend to cluster around Silicon Valley, consumer startups are more geographically dispersed. So partnering with CircleUp gives us a glimpse into a market that is otherwise logically difficult to study.
The CircleUp B Corp Fund has now invested in five companies:
Back To The Roots makes low-sugar, organic cereal that recently replaced Kellogg’s cereal in New York City public schools. Better yet, the switch was made after a student taste test.
Soma Water makes beautifully designed water filters, both for your refrigerator in a portable water bottles. It donates 1% of each sale to promoting water preservation projects around the world. It’s now sold at Target, Bed, Bath & Beyond, Bloomingdales, and Nordstrom.
Sustain makes condoms marketed toward women, with an emphasis on natural, fair-trade materials. It was recently profiled in the New York Times.
Ruby Rockets makes popsicles into something parents love as much as kids, with whole-food ingredients and no added sugar. Its mission is simple: “We believe that it is possible for fruits & veggies to be delicious.” Last year it made its first acquisition.
B’More Organic makes organic smoothies that are now distributed in Whole Foods, Kroger’s, and Wegmans. One-percent of sales go to Jodi’s Climb For Hope.
Since these are young, privately held companies, we don’t yet have investment return information. In aggregate, though, the businesses are succeeding. Revenue among the five portfolio companies was up 52% in 2016.
We think we’ve barely scratched the surface of this trend, and companies that create social good as part of their business model will define the next generation of great companies. We’re proud to partner with CircleUp, backing the good guys and making a positive impact on the world.