Foundry Group’s Seth Levine talks about how the new certification changes the way it works–and what stays the same.
Last week the Foundry Group venture capital firm announced that it had become a benefit corporation. More commonly known as B Corps, those are for-profit companies certified by the nonprofit B Lab to “meet rigorous standards of social and environmental performance, accountability, and transparency.” It’s a designation in keeping with the firm’s stated mission: “Foundry Group is passionate about helping outstanding entrepreneurs turn promising ideas into market-defining and market-leading companies.”
We spoke to Foundry Group managing director Seth Levine about what the move means to his company and beyond. (Note: Both Seth and Brad Feld, another Foundry Group managing director, are angel investors in NewCo.)
Why did you decide to make this change?
Since we started Foundry we’ve tried to run our firm in a responsible manner. This has included treating our employees and vendors well and engaging broadly in the communities in which we live and work. We’ve been particularly interested in encouraging companies to give back to their communities — first through helping found the Colorado chapter of the Entrepreneur’s Foundation and more recently by expanding this effort and founding the more nationally (really internationally) focused Pledge 1%. It was this commitment to our community as well as the desire to run our business responsibly that got us interested in the B Corporation movement. At first we were cheerleaders and supporters of the movement but it occurred to us that there was no reason a venture capital firm — with a bit of effort — couldn’t fulfill the requirements to become certified. To our knowledge a firm such as ours hadn’t taken that step, but we were intrigued by the challenge and emboldened by the idea of publicly demonstrating our commitment to responsible corporate practices.
What does being a B Corp let you do that you couldn’t do before?
The day-to-day operations of our firm will remain substantially the same. We made some important changes to the written policies and practices of Foundry, but many of the things required to become B Certified were things that we were already doing or wanted to do. We believe that by becoming a B Corp we can better encourage other companies — whether through B Certification or not — to run their businesses ethically and responsibly.
What companies were models for you as you made the decision and acted on it?
There are many great B Corporations. Well-known companies such as Patagonia and Method have the designation. In the tech world, companies like Kickstarter and Etsy have become B Certified or Public Benefit Corps. But I think we were most inspired by a group of local companies who had become B Corporations — Rally Software, Simple Energy, and dojo4. These weren’t just companies we had heard of. These were companies run by people we knew and saw regularly.
How do you run your business differently now?
Becoming B Certified raises the level of consciousness at your business around how everyday actions add up to effect the actions and impact of your entire organization. I think the biggest change in our operation of Foundry relates to that and the resulting changes in behavior driven by that sense of mission due to the B Corp label. We believe we have a high set of standards to continue to reach for.
Are you investing differently now?
We pay very close attention to the type of person we invest in because we know that we’re creating a long-term relationship with the entrepreneurs we work with. We’ve been very public about this and our desire to work with people who combine passion and compassion. Obtaining our B Corp status certainly won’t change the bar for the kind of entrepreneur we work with. But we do hope that by setting this example we’ll both encourage more companies in the startup ecosystem to become B Certified and we’ll attract even more passionate and dedicated entrepreneurs who want to work with an investor who is so clearly aligned with their values.
Will a new generation of Foundry managers eventually inherit your new structure?
Our plan all along for Foundry has been pretty simple: last person out turns the lights off. We actually don’t plan to have a generational shift at Foundry. The firm was started by the four partners with a plan to work together for 20 or 30 years and then close up shop. While that means we won’t be able to pass down the B Corp ethos to other Foundry partners, we do hope our actions will inspire other venture firms to consider the impact they could have on their communities and the companies they work with by becoming B Certified.
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