Petition website Change.org has raised a $25 million Series C round in a rather unusual way. Instead of finding institutional investment firms, Change.org’s new funding comes from socially conscious individuals (and a few firms with social investment mandates): Bill Gates, Richard Branson, Arianna Huffington, Evan Williams, Jeff Weiner, Jerry Yang and others. The list is a veritable who’s-who in tech.
Change.org makes money through sponsored recommendations, where petition creators can pay to put their petitions in front of other Change.org users with similar interests.
With the additional capital, Change.org will expand its mobile, political, and global efforts (Yeap, they’re pioneering GoMoPo. Hey, it’s better than AOL’s HoMo). The company plans to make it easier for people to create and sign petitions from their phones, as well as verify politicians and organizations on the app so these entities can converse directly with petitioners. And although Change.org already has employees in twenty countries, it wants to further expand the app’s tools and languages.
But the hefty bundle of new cash raises some questions for the company. Will Change.org’s humanitarian mission — “to empower people everywhere to create the change they want to see” — be compromised by its investors’ need for an exit?
Not surprisingly, Change.org COO Jen Dulski says no way. She had a few solid points to back herself up. The investors joining Change.org’s round have agreed to an unusual exit route. Down the line, the company can choose to return their money via private secondary equity offering or stock repurchasing, instead of an acquisition or IPO. That’s one big benefit to raising funding from socially conscious investors who are putting in their own cash, instead of a VC firm with LPs who need a big return.
Secondly, Dulski pointed out that Change.org is a certified benefit corporation. There’s no legal requirement to go along with that, but in order to keep its benefit corp status Change.org needs to apply to renew it every year. “The process is very rigorous,” Dulski says. “It makes sure you treat your staff in a certain way, you take care of the environment, that you’re transparent.” Change.org is also in the process of legally incorporating as a benefit corporation, which will add even more onerous standards to live by.