Home / Tech News / Change.org’s latest round was actually a recap

Change.org’s latest round was actually a recap



A few weeks ago we reported on LinkedIn co-founder Reid Hoffman’s investment in social justice petitions site Change.org.

Since then a few people with direct knowledge of the situation have told us that the funding round was actually a recap at a significantly lower valuation. In other words, there was a dramatic change to the ownership structure and most existing investors now own very little.

It’s looking like Hoffman will have either majority ownership of the company, or close to it.  Other big names like Bill Gates and Sam Altman recently contributed capital, but we’re told their ownership is inconsequential.

With the new structure, Hoffman should have enough power to block a sale, as will some of the other investors. They’re turning Change.org into a public benefit corporation, which makes it easier for individual shareholders to halt acquisitions.

But Hoffman’s not poised to make money. According to the company blog post, “Reid is pledging to donate any of the increase in the equity value of his investment to charity.”

Several people close to the situation have referred to this as a “reset,” likely because recap carries a negative connotation. Companies like Zenefits and Munchery have done recaps during periods of significant hardship.

We were told that in this scenario, the company did not find a more desirable funding option and needed the capital to continue. The overhauled cap table was green-lit in order to help Change.org survive.

Change.org has been candid about some of its struggles. There were layoffs last year at the company, and it has since announced changes to its business model. For example, it had been charging organizations to sponsor petitions, but it recently introduced crowdfunding to generate more revenue.

Still, other industry watchers worried that the way Change.org characterized its latest round was misleading.  While it might seem unimportant whether an outfit describes its financing events as standard or otherwise, the broader concern is whether describing funding only in a positive light is fair to current and future employees — or to other entrepreneurs who might be pursuing similar endeavors.

Recaps can also serve as learning opportunities — some might say cautionary tales — for investors.

Either way, while recaps are usually a sign that a startup has faced challenges, they can be a chance for a company to continue on a better path. It’s possible that this move will help Change.org move forward and ultimately bring about more value for its shareholders.

Certainly, its platform has been of service to many users. Since its 2007 founding, the company estimates that nearly 200 million people have used it to participate in more than 20,000 campaigns for change.

 



Source link

Fujifilm INSTAX Mini Instant Film Twin Pack (White)
by Fujifilm Platform: Not Machine Specific Fujifilm INSTAX Mini Instant Film Twin Pack (White) (3989) Buy new: $12.48 $12.42 28 used & new from $12.42
Sabrent 4-Port USB 3.0 Hub with Individual Power Switches and LEDs (HB-UM43)
by Sabrent Platform:   Sabrent 4-Port USB 3.0 Hub with Individual Power Switches and LEDs (HB-UM43)  Windows 7 / 8 / Vista Business / Vista Enterprise / Vista Home Basic / Vista Home Premium / Vista Ultimate / XP Home Edition / XP Professional Sabrent 4-Port USB 3.0 Hub with Individual Power Switches and LEDs (HB-UM43) (7447) Buy new: $8.99 21 used & new from $7.99
Echo Dot (2nd Generation) - Black
by Amazon Echo Dot (2nd Generation) - Black (47212) Buy new: $49.99 $44.99 9 used & new from $37.86
Echo Dot (2nd Generation) - White
by Amazon Echo Dot (2nd Generation) - White (47215) Buy new: $49.99 $44.99 8 used & new from $37.86

About admin

Check Also

email-sms-puzzle.png

Startup initiatives from down under may offer inspiration to the failing US Postal Service

Earlier this week, the US Postal Service reported another dismal quarter of financial results. It’s ...

Leave a Reply

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>