Our Investment in Open Collective

…And why we broke a few of our rules to do it :-)

Notation
Notation
3 min readSep 6, 2017

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Just last month, without much fanfare, Open Collective published the details of their most recent financing right out in the open on their site. Earlier in the year, founders Xavier, Aseem and Pia published their full investor update with some really exciting news, and some challenges too. This is of course not the first time a company has committed to radical transparency — Buffer and SumAll both come to mind as recent examples — but what‘s special about Open Collective is how they’re enabling others to pursue transparent organizational design as well.

Take webpack for example — a popular open source project that bundles JavaScript files for usage in a browser. In addition to the 988 people that contribute to webpack on github via code, 454 people give monthly donations to the project on Open Collective, giving webpack an annual budget of approximately $115,247. Instead of having to deal with the administrative burden of setting up legal entities, bank accounts, and accounting, Open Collective “hosts” webpack’s entire organization, and the community can follow along, down to the granular detail of each and every expense.

Why does Notation believe organizational transparency is important? Because it builds trust amongst people, companies and institutions. We’ve tried to live by these words and design Notation to be transparent too— a couple years ago we published our original pitch deck for Notation I, we published our Year 1 Review, and we’ve done a whole podcast series called Origins about the limited partner community, a part of the tech ecosystem that is historically quiet and opaque.

Xavier and the rest of the Open Collective team live by these principles as well. Their mission is to “empower people to create the organizations and institutions of tomorrow, one community at a time.” Today, you’ll find lots of interesting open source projects and meetups on Open Collective, and a few non-profits, such as Women Who Code. In the future, the platform will power parent associations, unions, political parties, and even decentralized blockchain organizations (potentially sooner rather than later :-).

It’s worth noting that lots of new blockchain projects today are structured a lot like traditional open source, many of them going through the near identical process (over and over again) of setting up a foundation in order to do an ICO or issue tokens. Open Collective “virtualizes” the process of spinning up a foundation — in this case giving each blockchain project their own “instance,” and allowing the founders to focus on their work building rather than legal and regulatory structure. There are huge sums of money being raised right now for decentralized blockchain projects, and while in most cases the core code is open sourced, there tends to be less financial transparency, especially after the crowdsale. So our hope is that more blockchain founders will consider a solution like Open Collective going forward.

Open Collective is a bit of a departure from our typical MO at Notation. We invested a little later than we usually do — the company will soon pass over $1M in annual recurring donations on the platform — but we felt so deeply aligned with the team and their mission, that we felt compelled to break a couple of our rules :-) In a way, isn’t that what radical transparency is all about? Watching folks operate out in the open, in all of their glory, contradictions, and nuance.

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