What we learned reviewing 82 applications for a cooperative business accelerator
In Fall 2018, we opened applications for the inaugural cohort of our new co-op accelerator, Start.coop, to help businesses that are focused on shared ownership, social impact, and scale. Given these requirements (a niche within a niche, we thought), we really didn’t know how many people would apply. We were excited to receive 82 applications! It was a competitive selection process, but in the end we chose 5 teams, who graduated in May at the SEED Conference in San Francisco, with one of our teams winning the top prize at the conference’s impact pitch competition. Looking back at our applications and what we have heard during the program, here are some of the key takeaways we’ve learned when it comes to new shared ownership models:
1. People are looking for new social impact models.
We received 82 applications from across the country, which was not only 3 times more applications than we expected. We have seen almost weekly inquiries since we started the program. People are tired of winner take all capitalism, and we heard from a new generation of entrepreneurs that are hungry for more information about how to share ownership by design. We also saw a strong crossover between people interested in shared ownership models, those looking at B-Corp structures, and the growing Zebras Unite community.
2. Many people don’t know what a co-op really is.
Most people have heard the term “co-op,” but we had applicants who didn’t fully understand it. Only 11% of Americans can accurately define what a co-op is. For the record, a co-op is a for-profit business that is owned primarily by either its workers or users. And when we say ownership, what we mean is the business shares profit back with its owners and also shares governance rights with those owners. And no, co-ops are not non-profits. The intention of a co-op is to share profits with its users; the intention of a non-profit is not to generate a profit at all. (It reminds me of when I told a friend that I was lactose intolerant, and they asked me if I could eat eggs. It isn’t an unreasonable question on the face of it, only in retrospect when you stop to consider that dairy and eggs come from very different animals. I get that it’s all in the dairy section of the supermarket!)
3. Just because you know and love co-ops doesn’t mean you have a workable business idea.
We met many entrepreneurs who loved the idea of being cooperatively owned as an alternative to what they saw as the toxic hierarchy of traditional businesses. However, you can be cooperatively owned by your workers or users and still not have a viable business plan for how to generate enough revenue to pay your employees or be financially sustainable. A lot of passionate people are drawn to cooperative ownership because of their social impact, but if you want your co-op to stick around, it is just as important to think through a sustainable revenue model. Co-ops don’t don’t need to have hockey stick growth, but they certainly need to profitable enough to pay their bills, their employees, and to invest in their future. So how are you going to do that? What product or service are you actually selling? Who are the customers? What is the pricing model? And who is the competition in that space today?
4. There are existing co-op resources that people are not finding.
Start.coop is hoping to fill a gap in the ecosystem, however there are some amazing resources that already exist. If you are considering starting a cooperatively owned business, first check out Cooperation Works to see if there is a cooperative developer in your region. The network is mostly made up of non-profit orgs and consultants who provide free or relatively low cost “technical assistance” to people with a cooperative business idea they want to start.
If you can’t find someone nearby, just reach out to whoever looks like the next best fit, they will likely guide you to the right person; co-op people are very friendly!
The further along you are on your business plan, the better your odds are for success, so you may as well talk to a co-op developer. In the United States, you can explore resources from the National Cooperative Business Association (which represents the broader ecosystem), the Democracy at Work Institute (for worker co-ops specifically) and the Platform Cooperativism Consortium (for online platform co-ops).
5. Lots of co-ops are also looking for funding — you’re not alone!
I will write a follow-up piece dedicated to funding because there is so much interest, and so much confusion. For now, here are the organizations that currently might provide financing to a start-up co-op. Talk to them ideally after you have talked to a co-op developer through the Cooperation Works network, and/or have developed a business plan. Each does wonderful work in their space, and each is managed by smart, caring people who genuinely want co-ops to succeed.
- For co-ops nationwide: Shared Capital or the Local Enterprise Assistance Fund.
- For worker or labor based co-ops: The Working World and the Seed Commons peer network they are building.
- For cooperatives in New England, connect to Cooperative Fund of New England.
As we work cooperatively to solve the challenges for start-up cooperative entrepreneurs, you can follow along with our learnings by joining our mailing list on our home page or by following us on Twitter.
Greg Brodsky is the founder and director of Start.coop, an accelerator for cooperatively owned businesses. Start.coop completed their first cohort in Spring 2019, and will be opening up applications for their next cohort in late Summer / early Fall 2019. To connect with a team from the inaugural cohort, or for more information about joining the accelerator as an applicant, mentor, or partner visit Start.coop.