You’re filling a need with Upside Foundation: What is that need and why does it exist?
Generally speaking, tech isn’t known as the most philanthropic sector. When people hear these huge valuations and what companies are raising, they wonder why it’s not translating to donations.
Why is that?
Tech companies are not built the same way that traditional companies are built. They generally take a long time to get to profitability because they’re focused on scale.
Tell us about the Upside model. How does it work?
The theory is this: If tech companies are going to have a huge impact on Canada, how can we trade in the same value that they trade in? In other words, their equity or their ability to be worth a lot of money in the future. Our model works on the same timeline of value creation.
Walk us through the model.
An early stage company can come to us and make a pledge of equity through various options, one of which could be stock options. Then some day, when they have a liquidity event such as going public or becoming acquired, we get to redeem our stock options for cash, which is donated to a charity of the company’s choice.
So, it could take anywhere from a couple of years all the way to a decade?
Yes, it could be one, five, or ten years—and possibly not at all. Of all startups created, only about 10 percent succeed. We hope our portfolio does a little better than that, but we plan for it by engaging as many companies as possible. You never know who is going to end up being the next unicorn worth a billion dollars.
Why take a portfolio approach?
We debated this at the board level. Is our mandate exclusively to raise as much money as possible for charity, or is our mandate more broadly to build a culture of giving in Canadian tech? We’ve decided to not just focus on a small number of companies that already have a really strong track record, but to expand our portfolio to include early-stage, high-potential companies. We think this is important to building a culture of giving in a deep and authentic way across the industry. We want that culture of impact to be baked into the DNA of Canadian tech.
Have any charities benefited from this to date?
We’ve had five exits to date: one went public, three were acquired, one had a majority buyout. We’ve raised just over $220,000 for charities so far. That was divided among seven different charities across Canada.
How do startups view philanthropy and giving back, compared to more mature companies?
Often it’s the founders’ beliefs and values shaping the desire to give back. They may be a millennial who grew up in a world where you don’t separate making money from doing good, or they may be someone a little older who has built and sold companies and they don’t want to do that in only a business-focused way. And, frankly, it makes companies look good and adds values to their culture and brand. We shouldn’t shy away from saying that because it gives companies the justification they need to bring to their boards to say why this is a worthy thing to do.
What does the future of corporate social responsibility look like in your mind?
The golden era of tech is over. Years ago, tech was on a pedestal and founders were kind of given a free pass. In the past few years, we’ve seen tech companies in the headlines and brought in front of congress. What we see in tech is people thinking about their impact from Day 1. If they’re building an AI company or a gig economy platform, they are asking who might lose jobs from their work? It’s about being honest about the positive and negative impacts and proactively mitigating these factors within your model. If you are hurting jobs, are you setting up a re-skilling fund? It’s about being proactive and conscious, rather than privileging this ‘move fast and break things’ mantra that some companies have had.