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Investing in The Working World

“Business with a conscience” is no longer a fringe mentality. Witness top Walmart executives writing for consulting giant McKinsey:

“Increasingly, a basic expectation among customers, governments, and communities will be that the companies they do business with provide a significant net positive return for society at large, not just for investors. This will be a part of the implicit contract or license to operate.”

This changing reality raises questions not just for corporate executives, but for the investors who back them, from angels to hedge funds to household shareholders. How do we make a return on our investment – thus enabling future investments – without extracting more value than we create in the process?

Somewhere between philanthropy and profiteering lie the murky waters of impact investing, socially responsible investing, triple bottom line, and their ilk. For investors who want more out of their dollar than pure return, there are no shortage of socially-minded strategies, accounting frameworks, and certifications. The challenge is navigating around the buzzwords and greenwashing to ventures with a genuine likelihood of sustainable positive outcomes for investors and communities alike.

In my capacity as an angel investor I’ve tried to fund young companies that offer products and services with a clear social benefit, from health to disaster relief to global connectivity. Yet, venture-backed startups are operating under an extreme form of traditional capital investment that often sees businesses abandon their values and customer commitments along the road to riches – if they even make it. As a kind of socially-minded hedge against the startup pressure-cooker, I looked far and wide for investment opportunities that address structural issues.

The Working World (TWW) is, I believe, such an opportunity. They describe themselves as “venture capitalists with a radical social mission: to lend people the tools to democratically build lasting wealth for themselves, their businesses, and their communities”. By investing in worker-owned enterprises, TWW offers the all-too-rare chance for harmonious collaboration between labor and capital.

Cooperatives offer a proven long-term model for enriching and empowering working communities. TWW acts as a non-profit facilitator, matching money from investors like me to cooperative businesses around the world. They stay directly involved in the companies they fund, building mutually respectful relationships that weather the ups and downs of the global market.

Earlier this year, TWW founder Brendan Martin incorporated my feedback into a new investment vehicle. From the investor’s side, it’s not unlike putting money into a hedge fund. For TWW’s part, they have leeway to accomodate the businesses they work with, offering fair terms and flexible repayment timelines. Returns will help to cover TWW’s modest operating expenses and can be readily reinvested in other cooperative businesses.

This new fund expands on the decade of success that TWW has seen, first in Argentina and Nicaragua, and now right here in the US. They give workers the same benefit of shared risk tolerance that high-flying startups get from VC firms; only successful investments are repaid. Unlike so many of those richly-capitalized startups that go up in smoke, TWW’s democratic worker cooperatives have thrived, delivering a nearly perfect repayment rate.

The cooperative model lets working people control their own destinies. The experience of cooperative enterprises like Spain’s Mondragon Corporation make clear that this bottom-up approach yields jobs, revenues, and technological advancement over the long term. Indeed, as a Forbes contributor argued, even white-collar workers at large companies might be better off in cooperatives: the lowest-paid employee at Apple would have taken home $403,000 last year if the tech giant converted to worker-ownership.

I’m looking forward to my continuing collaboration with Brendan and the rest of the team at TWW as they expand opportunities for working people around the globe. I encourage other investors to investigate the untapped potential of cooperatives, and to join the $1M I’ve put into The Working World’s new fund.