Instacart, Blue Apron, and Zenefits all have one thing in common: each has created vast wealth for their founders and each business is now worth billions of dollars.
Serial entrepreneurs, VC’s and consumers with enough spare cash and the savvy to invest in IPOs can win big betting on startups. They can lose big, too.
Crowd-funding and companies like OurCrowd, a hybrid capital and angel investment firm allowing consumers to co-fund startups alongside venture capitalists and larger corporations are helping to democratize investment in startups, but it’s a pool still largely limited to high-net-worth investors who can meet financial thresholds.
High growth businesses have rewarded the few, rather than many. The majority of the population benefits as users rather than stakeholders of billion-dollar businesses.
Level39, Europe’s largest accelerator space for finance and retail technology startups wants that to change. The London-based organization helps early-stage businesses accelerate high growth and is encouraging companies large and small to share a modest part of their success with the general public through an initiative called Equity Heroes, inspired by a Harvard University research paper demonstrating the value of a lottery system underpinning savings products.
“As predicted by theory and international experience, interest in prize-linked savings is greatest among people who do not have regular saving habits, who have little actual savings,” noted the report.
Level39 intends to apply the concept to Equity Heroes, distributing small quantities of company equity, typically 1 percent, to members of the public through a free-to-enter, open-to-all lottery.
The concept isn’t strictly altruistic. In return, Equity Heroes will deliver companies a wider range of exposure than traditional marketing efforts through media engagement and direct access to consumers, as stakeholders become advocates, while providing a financial stake to the customers they are serving.
Level39 CEO Ben Brabyn believes its time for businesses to increase their societal value and help develop a stakeholder economy.
“People are increasingly finding themselves removed from the rewards of entrepreneurship. There have been suggestions that employees should have a bigger stake in the companies they’re employed by; that makes sense but, so too, should others in society. There’s a feeling of not being involved or connected to technology. When you have a stake in a business you become an advocate. This makes entrepreneurship accessible to all.”
At this stage, Level39 is calling on companies interested in participating to get in touch with Ben Brabyn at Level39 to begin conversations.
“We’re not limiting ourselves to a specific type or size business,” Brabyn says.
The organization is also seeking partners such as corporations, data providers, social scientists and others to assist in delivering a secure lottery process to select a winner from the United Kingdom. Once companies are approved for the initiative, companies will gain access to increased stakeholder engagement, media awareness and investor relations. Equity Heroes is expected to launch in the first half of 2019.