Kickstarter joined other tech darlings like Warby Parker and Etsy in 2014 in becoming a “B-Corporation,” which means committing to doing something that helps the public at large (in this case, helping make home-conceived gadgets and other projects a reality) and including that in your corporate charter. Board members take the mission into account, and B-Corps report on their social impact.
Now, Kickstarter is taking a step beyond its peers with efforts to make sure that money does not corrupt their mission. It has announced plans to reincorporate as a public benefit corporation, which legally obligates it to act for the public good.
“We don’t ever want to sell or go public,” CEO Yancey Strickler told the New York Times (paywall). “That would push the company to make choices that we don’t think are in the best interest of the company.”
Etsy went public earlier this year. Warby Parker has stuck to private markets to this point, but has reportedly at least flirted with the idea of going public.
Announcing this decision should have fascinating consequences for the company.
“[Kickstarter] is a fast-growing, highly profitable enterprise. So, as an owner of the stock, I feel comfortable that I will be rewarded for that,” investor Chris Sacca told The Times. “When the time is right, I’m confident that Kickstarter will return cash to their loyal shareholders.”
Although Kickstarter is profitable, it may start looking like a slower-growing, mature company far more quickly than most venture-backed firms do. By reincorporating, it may make raising future investment capital more difficult, which could hinder expansion. Shareholders aren’t likely to see the sort of return they’re used to.
Plus, Kickstarter may no longer be able to provide the kinds of high upside equity packages that software engineers tend to expect when joining an early stage company. A mission is great. But compensation is often the factor in attracting and retaining talent.