Kickstarter is one of the most successful startups in recent memory; so successful that it is closing in on becoming a verb – much like Google. However, founders Yancey Strickler, Charles Adler, and Perry Chen have decided against launching an IPO to bring in more funds for the company. Instead, Kickstarter has been registered as a Public Benefit Corporation and is now legally bound to make the world a better place.
Despite what most founders claim, most startups exist to earn money and make their owners rich. This usually involves multiple rounds of venture funding and the eventual incorporation as a public listed company.
Kickstarter does not appear to want to walk this line, and is keeping to its original goal of helping bring creative projects to life. The classification of Public Benefit Corporation is relatively new, and is only available is several American states. Under it, the company will be held to a higher standard of social responsibility – and must take into account public benefit when making business decisions. In return, it gets nothing more than the title of being a PBC.
The company has renewed its commitment to the arts and culture under its new charter; it has also renewed its pledge to donate 5-percent of its after-tax profits to the arts and the fight against inequality.
More importantly, the company has also promised that it will not use any tax loopholes to reduce its tax burden. Tax loopholes are how many technology companies maximise profits, mainly by incorporating offices in countries that provide large tax breaks and funneling all profits through there.
This sort of announcement isn’t common for tech companies; who are usually more than happy to cash out when larger corporations come along. It is refreshing to see a company decide to work for the benefit of the public, and even more refreshing that it was a unanimous decision to reincorporate as a PBC.
That being said, Kickstarter is still a for-profit company and will still be trying to make money. It will just being doing it while trying to promote the arts.