Originally published on Protocol. Written by Biz Carson.
SPACs may have been the hottest IPO trend in the last year, but now a bunch of investors are hoping to make another aspect of going public just as cool: corporate philanthropy.
The blockbuster IPOs of companies like Coinbase and UiPath came with a pledge to set aside shares of the company for charity. This week, over 40 investors, including folks like Benchmark’s Peter Fenton and SV Angel’s Ron Conway, joined Pledge 1% as boardroom allies to help their portfolio companies follow the same path.
- UiPath’s CEO Daniel Dines heard about Pledge 1% during a Forbes event when he was talking to other CEOs who had gone through the process, like those from PagerDuty and Atlassian. The company had already engaged in some philanthropic activities through a nascent foundation, but when UiPath went public, it set aside nearly 3 million shares to be reserved for philanthropy as part of its new pledge.
- “When you look at the long list of amazing companies that are part of Pledge 1%, Salesforce included, this isn’t a new unproven approach to charity,” said UiPath CMO Bobby Patrick. “It’s actually quite well-proven, and in our view, this is what every up-and-coming tech company should be doing as a normal course of business.”
Companies need support to become effective in their philanthropy, said Amy Lesnick, CEO of Pledge 1%.
- “We really see a time that’s not so far away when setting aside equity for your philanthropy is really just as common as setting it aside for your employees. It’s just what people do,” she said. “To make that happen you need standards, you need an ecosystem of support and you need to make it easy.”
- Recruiting VCs to evangelize corporate giving is just the start. UiPath board member and CapitalG partner Laela Sturdy had often fielded questions from founders about how they should be giving, but it wasn’t until UiPath that she realized Pledge 1% had a playbook ready to go. “I’ve brought it up proactively with so many founders I work with and they’re just relieved,” she said.
It’s just one way the tech industry is trying to use its power and newfound wealth for good.
- When Airbnb went public, hundreds of Airbnb employees signed a pledge to donate proceeds of the IPO to charity. “So much of the conversation around tech company IPOs focuses on how the newfound wealth will be used for consumption,” Janet Frishberg, a recruiter for Airbnb from 2013 to 2019, told me at the time. “I was wondering if we could change that conversation and have at least part of the focus be on how we can give these newfound resources to help others and help our local communities and also help the world.”
- Investors are playing other roles too. Bloomberg Beta’s Roy Bahat also helps run a program through Stanford that’s meant to educate early startup employees on how to manage their wealth in an impactful way.
It’s not only good for the world, but it’s also just good for business, said Accel’s Rich Wong, who sits on UiPath’s board.
- The tech industry used to see itself as a niche upstart, but that’s changed. Companies who have seen this tremendous growth have a responsibility to give back, he said. “We have an obligation as a community to our communities,” Wong told me.
- There’s also a competitive advantage when it comes to hiring: “In the battle for the best talents, they want to work for a company that has a mission and has a heart, that’s not just about value maximization,” Wong said.
- UiPath agrees: “Not only is this at the heart of how our founder thinks, but our employees and our new employees coming to work for us, they want to work for a company that gives back,” Patrick said. “They care about the environment and social responsibility, and investors now care about corporate governance and ESG.”
