REALLY REALLY added 'Exit to Co-op'

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+% Exit to Co-op
+% Nathan Schneider + Jason Wiener
+% (Use lateral arrow keys to navigate)
+
+## Can cooperative ownership improve your deal-flow?
+
+We think it might.
+
+## Who are we, anyway?
+
+---
+
+<img src="https://i2.wp.com/www.jrwiener.com/wp-content/uploads/2014/03/NoTie.jpg?fit=432%2C287" height="250px" />
+
+### Jason Wiener
+
+
+Principal at [Jason Wiener|P.C.](http://www.jrwiener.com/), "a boutique law and business consulting practice providing expertise to social enterprises and mission-driven business models"
+
+---
+
+<img src="https://nathanschneider.info/images/headshots/Schneider-Flatirons0-thumb.jpg" height="250px" />
+
+### Nathan Schneider
+
+
+[Assistant Professor of Media Studies](http://www.colorado.edu/cmci/people/media-studies/nathan-schneider) at the University of Colorado Boulder, leader in the ["platform cooperativism" movement](https://ioo.coop/); co-organizer of [the original conference](http://platform.coop/2015) and co-editor of the collective manifesto, _[Ours to Hack and to Own](http://www.orbooks.com/catalog/ours-to-hack-and-to-own/)_
+
+---
+
+## What is Platform cooperativism?
+
+A growing movement to build democracy into the operating system of the internet, from worker-led startups to #BuyTwitter
+
+---
+
+## So, what's the problem?
+
+---
+
+## The internet economy needs better options
+
+* Dominant platforms built on surveillance and monopoly
+* Investor expectations have decentralized the network
+* Problems start with early funding terms
+* With fake news, hate speech, and bullying, investor interests conflict with those of users
+
+---
+
+### Investors need better options, too
+
+How many companies in a given VC or angel portfolio either: 
+
+* don't need subsequent financing
+* are operating profitably
+* are not likely to IPO or get acquired
+* have a founder who doesn't want to sell
+
+Is there latent value in your portfolio that a strategic co-op conversion can unlock?
+
+Can we do better than a 1/10 success rate for liquidity?
+
+---
+
+### What's the addressable market we're talking about?
+
+* % of convertible note portfolio
+
+* \# of growing portfolio companies with no strategic buyer
+
+* \# of mature portfolio companies ready to exit
+
+---
+
+## Where do co-ops come in?
+
+*A new market of potential buyers*
+
+* Users, workers, or other stakeholders buy the company from early investors
+
+* The company benefits from the trust and loyalty that come through co-ownership and democratic governance
+
+* Early investors benefit with a fair return
+
+* All can celebrate the social benefit
+
+---
+
+## How would this actually work?
+
+1. Identify candidates in fund portfolios for co-op conversions
+
+2. Co-op capital partners finance buyout with exit to future co-owners
+
+3. New co-owners pay off bridge capital with revenue from their business
+
+---
+
+## What might the terms look like?
+
+
+
+---
+### Example 1: Direct buy-out
+
+Consider a portfolio company, **PortCo**, with steady cash-flow and a vibrant user community. The founder doesn't want to raise additional capital in a qualified financing; there is little to no likelihood of a convertible note converting. The fund prefers to extend the note rather than claim the principal with accrued interest.
+
+<!-- * Independent and/or negotiated enterprise valuation -->
+<!-- * User/worker/contributor capitalized buy-out through equity purchase and subscription payments -->
+
+---
+
+#### What does this mean for PortCo?
+
+*  Founder negotiates enterpise valuation
+*  PortCo undergoes user/worker/contributor buy-out of controlling interest
+*  NewCoop becomes a multi-stakeholder cooperative with:
+    * Worker owners (employees)
+    * User owners (customers)
+    * Contributor owners (contractors)
+* Net profit allocated on basis of patronage and target dividend (or capped revenue share) to outside investors
+* Fund converts at buy-out valuation or valuation cap, then holds preferred stock
+
+---
+
+###  Example 2: Leveraged buy-out
+
+Consider a portfolio company, **TechCo**, that is growing rapidly and not yet profitable, but the founder doesn't want to exit. A mission-aligned private-equity buyer with co-op experience negotiates a buy-out with committed exit to user-ownership. There is little to no likelihood of a convertible note converting. The fund prefers to extend the note rather than claim the principal with accrued interest.
+
+---
+
+#### What does this mean for TechCo?
+
+* Negotiated buy-out valuation to mission-driven private equity (PE)
+* Fund gets converted at buy-out valuation or val. cap, then position liquidated
+* PE takes control, restructures with balance of profit and growth
+* Plans multi-year transition to user-ownership
+* PE recoups investment through profitability
+* Resulting entity is either earn-in or buy-in coop or trust
+
+---
+
+### Example 3: Seed stage
+
+* Un-priced, quasi-convertible note investment
+* Equity line of credit - 10% equity- preferred stock
+* Repayment:
+    * Discretionary cash distributions
+    * Profit Sharing
+    * 3x cap
+    * If 3x cap is reached in < 3 years, 5% equity
+* No need for exit or additional financing
+
+(Adapted from [Indie.vc](http://indie.vc))
+
+
+---
+
+## What makes us think this really can work?
+
+*or, why is this not utopian?*
+
+---
+
+### Namaste Solar
+
+<img src="http://www.namastesolar.com/wp-content/uploads/2016/07/logo-footer-white-2.png" width="250px" />
+
+A North Boulder solar pv company converted from a partnership to a worker-owned cooperative. Jason was in house counsel during the process.
+
+---
+
+### Stocksy United
+
+<img src="https://tctechcrunch2011.files.wordpress.com/2013/03/screen-shot-2013-03-27-at-1-01-42-am.png?w=400" width="250px" />
+
+A thriving, women-led stock-photo platform co-owned by hundreds of photographers, competing effectively in a competitive online market.
+
+---
+
+### dojo4
+
+<img src="http://d33wubrfki0l68.cloudfront.net/images/global/f7a48faf00783246637567fce84518349358153c/a-2.png" width="250px" />
+
+Successful Boulder technology services firm and social innovator converted from a partnership to a worker cooperative in early 2017, preserving flexibility and boosting a high-integrity brand.
+
+---
+
+### Associated Press
+
+<img src="https://upload.wikimedia.org/wikipedia/commons/thumb/0/0c/Associated_Press_logo_2012.svg/416px-Associated_Press_logo_2012.svg.png" width="250px" />
+
+Founded as a cooperative in 1846, it's no accident that nobody accuses this company of "fake news." Today it models the potential for co-ops in large-scale media.
+
+---
+
+### Twitter (?!)
+
+<img src="https://upload.wikimedia.org/wikipedia/en/thumb/9/9f/Twitter_bird_logo_2012.svg/1267px-Twitter_bird_logo_2012.svg.png" width="250px" />
+
+At the 2017 annual meeting, Twitter shareholders voted on a widely publicized proposal to study the possibility of co-op conversion. Is this as crazy as it sounds?
+
+---
+
+## How can we graft these models into the mainstream tech economy?
+
+We want to build pathways for entrepreneurs and investors to embrace cooperative
+models—and a fairer internet for everyone.
+
+
+---
+
+## We'd love your ideas and your help
+
+* What players need to be involved to make this work? Incubators, accelerators, fund managers, private equity, legacy co-ops?
+* What barriers exist to deploying capital?
+* How do we identify and vet deals?
+* Who would be receptive to continuing this conversation?
+* What role might you play?
+
+---
+
+## How can you learn more?
+
+[The Internet of Ownership](https://ioo.coop)   
+Directory of the platform co-op ecosystem
+
+_[Ours to Hack and to Own](http://www.orbooks.com/catalog/ours-to-hack-and-to-own/)_   
+A collective manifesto on platform cooperativism
+
+
+<br />
+
+<table>
+<tr>
+<td width="50%">
+**Nathan Schneider**
+nathan.schneider@colorado.edu
+</td>
+<td width="50%">
+**Jason Wiener**   
+jason@jrwiener.com
+</td>
+</tr>
+</table>