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Angel-Backed Start-Up Challenges Venture Firms to Invest in Their First B-Corp

Angel-Backed Start-Up Challenges Venture Firms to Invest in Their First B-Corp

Published 02-27-12

Submitted by Ethical Ocean

Ethical Ocean

There are close to 30 million companies in the U.S. – of those, only 500 are certified B-Corps. Earlier this year, Ethical Ocean (www.ethicalocean.com) joined the ranks of this exclusive group, becoming one of the first angel-backed start-ups to earn the certification usually reserved for well-established companies.

To be a certified B-Corp, a company must make its social and environmental impact core to its mission. Once certified, Directors of the firm are legally entitled to consider the interests of employees, the community, and the environment when making business decisions. While many start-ups see this as limiting and restrictive, Ethical Ocean sought certification as an important part of their funding strategy.

The online retailer that specializes in eco-friendly, cruelty-free, fairly made products launched early in 2011. In their first year they posted an impressive 50% month-on-month growth rate and raised $500,000 in angel funding. Looking forward they intend to raise $3-4 million in venture-backed investment this spring to continue fuelling their rapid growth – growth, however, that they won’t prioritize at the expense of the company’s principles.

This is one of the start-up’s strengths, explains CEO Chad Hamre. According to Hamre, becoming a B-Corp is an important step in Ethical Ocean’s funding process. “It tells investors exactly where we stand,” he says. “We will not disregard our principles to maximize profits   and at the end of the day, we want to work with investors who share our values and understand that this commitment is also good for business.”

Some are theorizing that the newly founded certification may help companies like Ethical Ocean command higher valuations because the trust B-Corps build with customers, employees, and partners ultimately bolsters brand equity and goodwill.  However, to date, it appears that the most prominent venture firms – Sequoia Capital, Bessemer Venture Partners, and Greylock Partners – have yet to invest in a B-Corp. Ethical Ocean thinks they will be among the first.

“Gaining B-Corp status is a way to ensure that positive social and environmental impact remains part of our corporate DNA,” according to Hamre. “We’re confident this unwavering commitment will increase the attractiveness of this investment to any investment firm that recognizes how quickly the ethical market is growing.” Only time will tell if the venture industry is ready to embrace B-Corp.

Ethical Ocean

Ethical Ocean

Ethical Ocean exists to strengthen and grow the entire market for fair-trade, organic and cruelty free products. To everyday people, we are a rich and diverse online shopping destination for the “best of” ethical products. To the producers and manufactures of such goods, we are a new online sales channel - a place to be featured, to find customers and ultimately a place to grow. Ethical Ocean envisions a world where everyday consumers routinely consider and optimize the environmental and social impacts of the products they buy. Today that is possible, but it is very difficult. Ethical goods are hard to discover, hard to verify, and hard to buy. We aim to change all of that. We handpick the world’s best ethical products, and make them all available in one easy to use marketplace.

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