GLAMM 2015

The International B Corp And

Benefit Corporation

MovementDoing Well by Doing Good

Presented by

Jonathan S. Storper

Hanson Bridgett LLP

Globalaw Renewables & Cleantech Initiative

• A certification conferred by the

non-profit B Lab – operations

as a whole

• A company that meets a high

level of social and

environmental performance

AND makes a legal

commitment to consider all

stakeholders

• Any for-profit company in any

country can pursue

certification (LLC’s, LLP’s

included)

• Membership Dues

• A corporate form (taxed like a

C-corp or an S-corp) that has a

higher level of transparency,

accountability and purpose

• A legal entity that has

protection and permission to

consider its impact on all

stakeholders, not just

shareholders

• 30 states in the US and

counting

• Similar forms exist or being

considered in other countries

e.g. UK, CAN, Italy

B Corp International

Certification

United States

Benefit Corporation

Big International Trend & Opportunity

Why? Today’s Consumers are Demanding Better

370

503

How to Become a B Corp

Earn a verified score of 80

points on the B Impact

Assessment

Give the company permission to

consider all stakeholders.

Make a profile showing topline

performance on Bcorporation.net.

80+

To learn more, visit:

www.bcorporation.net/become-a-b-corp/how-to-become-a-b-corp

The B Corp International Community = Good

Company to Keep

Show Leadership

Attract and Engage Talent

Save Money and Access Services

Partner with Peers

Benchmark Performance

Differentiate from Pretenders

Generate Press

Attract Investors

Membership Dues

Why Become a Certified B Corp

Attract and Engage Talent

“B Corps are 46% more likely to have satisfied and

engaged employees than ordinary businesses.”

B Analytics

“Employees who are satisfied in their jobs because

they believe in what they are doing have 16% better

overall performance and 125% less burnout than their

peers.” Harvard Business Review

“Almost two-thirds of millennials said they would rather

make $40,000 a year at a job they love than $100,000

a year at a job they think is boring.”

Forbes

• B Corp certification provides a platform to engage current staff and

give employees more meaning in their work

Global Movement>1414 B Corporations 42 Countries 130 Industries 1 Unifying Goal

https://www.bcorporation.net

In 2015, Brazil’s top cosmetics, fragrance and toiletries maker, Natura, became

the largest – and first publicly traded – company to attain B Corp sustainability

certification.

Consumer goods giant Unilever’s chief executive Paul Polman has stated that

becoming a B Corp would send a powerful signal that the purpose of business

is not just profit, but to have a positive impact on society and the environment.

The Guardian

Friday 23 January 2015

Examples

Benefit Corporations - Maintain Mission

• Bakes the values of the company

into its legal DNA

• Gives protection and permission to

consider non-financial stakeholders

(community, employees, suppliers,

environment)

• Ensures that mission can survive

over time

• Expanded purpose beyond

maximizing share value to explicitly

include general and specific public

benefit

• Directors must consider & balance

stated public benefit purpose and

non-financial stakeholder interests

when making decisions

• Requires report to owners and the

public on Company’s social and

environmental performance

What is Different About a Benefit Corporation?

For-profit company:

Legal Protection for Stated Values

• Safe harbor for directors for multi-stakeholder approach• Flexibility to prioritize among profits, environment and social

concerns

Exit Strategies and Succession Planning

• Stated values unchanged by sale of minority/majority of stock

• Greater flexibility to identify the "right" buyer and succession planning

10587122.1

Why Become a Benefit Corporation?

Misperceptions About Benefit Corporations

Benefit corporations are NOT

• Nonprofits

• Taxed differently

• Required to be audited or certified

• Subject to additional liability exposure from third parties

• Prevented from going public

3000+ Companies Have Become BenefitCorporations and Over 250 in Delaware

Kickstarter decided to become a public benefit corporation because

“there’s a huge difference between a values document and the legal

foundation of your company,” said Mr. Chen, who serves as chairman.

NY Times

September 20, 2015

Patagonia has been a 40-year experiment in what it means to be

a responsible company, and becoming a B Corp has ensured

that our experiment will keep pushing forward.”

- Rose Marcario, Patagonia CEO

Mainstream venture capital firms have supported portfolio

companies’ election of benefit corporation status:

• Foundry Group, Founders Fund, Andreessen Horowitz,

Benchmark, Sherbrooke Capital, Toby Coppel and Hadi Partovi,

Freshtracks Capital, Bullet Time Ventures, Generation Equity

Investors, Ironwood Equity Fund, Lighter Capital and Golden

Seeds Capital, Collaborative Fund, Baseline Ventures

Benefit corporations have raised capital from mainstream venture

capital investors:

• River Hollow Partners, NEA, Forerunner Ventures, The Westly

Group, Claremont Creek Ventures, Prelude, Mindful Investors,

Lighter Capital, DBL Investors, Tim Drapper, CommonAngels

Ventures, Brand Foundry and Greycroft Partners, Learn Capital,

Bertelsmann

B Corps and Benefit Corporations are Raising

Venture Capital

Traditional, cleantech and social impact investors all reported

finding value in benefit corporation form:

• Westly Group

• Claremont Creek Ventures

• Prelude

• DBL

Raising capital as a benefit corporation:

Investor Perspective

Few changes to investment process were required:

• Minimal increase to legal due diligence

• Most did not require additional disclosure to limited partner investors

• Confirmed benefit corporation status not an obstacle to future

investment

“Westly Group's investment in yerdle was not hampered by their benefit corporation

status and did not greatly change our due diligence process. Instead, we viewed

their status as part of the founding team's vision and as a valuable tool that created

alignment between their core business model and the company's mission.” –Mike

Jackson, Westly Group

The Fortune 500 are supporting benefit

corporations

Founded in 2006, Plum Organics is the No. 1 brand

of organic baby food in US

• June 2013: Acquired by Campbell Soup Company

• Plum approached Campbell about converting to

benefit corporation status in time for DE effective

day 2 months later

• Campbell approved the transition so that Plum

could continue to balance profitability mission, an

important brand attribute consumers expect and

value. “There’s a lot more authenticity in the process today and there’s a lot more strategy

around long-term shareholder value. If you get in line with that, it’s not a scary proposition. Frankly, I kind of like being the only [publicly-held owner of a DE Public

Benefit Corporation] — it’s a great story for us to tell. But it’s a model that a lot of

others could follow.” - Dave Stangis, VP Corporate Affairs and Social Responsibility,

Campbell Soup Co

Corporate Social Responsibility (“CSR”)

B/Benefit Corporation - profitable/competitive

operations taking all stakeholders into account

- All operations

CSR – company’s sense of responsibility towards certain

aspects of the community or the environmental which

may be changed at any time if it hinders the organization

or is not honored by the public/customers

- “Save the Whales” project

- Use of renewable energy sources

Case Studies

Becoming a benefit corporation: Ello

• Raised $5.5M from Freshtracks Capital, Bullet Time Ventures,

Foundry Group and announced transition to PBC

• Transition promotes consumer trust and protects mission

Ello, is an anti-facebook social

networking site founded in 2013 by

the founder of KidRobot

• Concern from users that

manifesto and privacy would

disappear

"Signing the Ello charter was a no-

brainer for us as investors. We

believe in the mission, and the (b corp

status) further enforces the

manifesto...” – Bullet Time Ventures

"Benefit corporation creates

alignment between investors and

entrepreneurs around the mission

and focus of the business allowing

both parties to work together

successfully.” – Seth Levine, Foundry

Group

Becoming a benefit corporation: AltSchool

AltSchool operates a growing network of K-8 micro-

schools and improves access to quality schooling

for all children

• 2013: Incorporated in Delaware as a C Corp

• 2013: Raised $33 M Series A funding

• 2014: Received unanimous support to become a

public benefit corporation from its investors,

including Founders Fund and Andreessen

Horowitz

• 2015: Raised $100 M from Andreessen

Horowitz, Founders Fund, Learn Capital and

First Round Capital AltSchool’s benefit corporation legal status allows the team to think

beyond short-term profits and focus on fundamentally improving the

education system for many decades to come” – Founders Fund

Becoming a benefit corporation: Farmigo

• During financing, intent to become a benefit corporation was

clear

• Investors determined that director liability wouldn’t change

• Benefit corporations status did not pose an upfront obstacle

in investor discussions

Farmigo, founded in 2009, is

an online farmer’s market

• Raised $10M from

Benchmark, Sherbrooke

Capital, Toby Coppel and

Hadi Partovi

Raising capital as a benefit corporation:

Cotopaxi

Cotopaxi is a vertically-integrated outdoor gear

and apparel brand, with a social mission at its

core

• 2013: Incorporated as a PBC and started

fundraising

• No pushback from investors on corporate form

• Raised $3 M in seed funding NEA, Lerer

Hippeau Ventures, and Forerunner Ventures

• 2015: Raised 6.5M in Series A led by Greycroft Partners with

NEA, Lerer Hippeau Ventures, Forerunner Ventures and

Brand Foundry

Raising capital as a benefit corporation: Alliant

International University

Alliant International University is a private

university with more than 4,000 students

and ten campuses

• In 2015: Converted from non-profit to

benefit corporation

• At the same time, Bertelsmann’s subsidiary Arist Education

System, their VC fund, acquired a controlling interest

• Bertelsmann’s plans to make $564.7M in acquisitions

through Arist Education systems and all acquired universities

will be benefit corporations

Raising capital as a benefit corporation: Yerdle

• 2012: Incorporated as a benefit

corporation

• Raised capital from angel investors and

$1.7M in seed funding via capped

convertible note

Yerdle , founded in 2012, by former

executives at Walmart and Satchi & Satchi,

is an app for exchanging used goods

• Raised $5M from VC funds in series A financing round from The

Westly Group, Claremont Creek, Prelude, Mindful Investors

and DBL Investors

• Benefit corporations status did not pose an upfront obstacle in

early investor discussions

Jonathan S. Storper, Esq.

Jonathan is the co-chair of the legal working group which drafted

the benefit corporation legislation in California, and a partner at

the law firm of Hanson Bridgett LLP in San Francisco, California

where he chairs the firm’s corporate department. He was

selected as the California Lawyer Attorney of the Year for 2012

for his work on this legislation.

Hanson Bridgett LLP

425 Market Street, Suite 2600

San Francisco, California 94105

jstorper@hansonbridgett.com

415-995-5040

Thank You

Questions?