This week Amy Cortese of Locavesting featured an article that explains how accelerators like Start.coop aim to scale up small cooperatives.
“Cooperatives are gaining renewed interest as an antidote to our winner-take-all society. But while tech startups have a rich ecosystem to tap into, from accelerators to seed funding to get-big-fast playbooks, new cooperatives are usually left to figure things out on their own.
That, says serial coop entrepreneur Greg Brodsky, helps explain why most co-ops stay small. There are roughly 40,000 co-ops in the U.S. But aside from notable examples like ACE Hardware, REI, Organic Valley, Welch’s and a handful of other giants, most co-ops are modest affairs.
“The co-op sector is not keeping up with our economy. We need to try new and more scalable models if we are to reverse the trend of ‘Amazon-ification’ and economic consolidation,” says Brodsky.
That’s what he aims to do with Start.coop, a new accelerator tailored to the needs of ambitious cooperatives with high growth potential. “We want to give people more of a recipe for how to create the next generation, scalable co-op,” says Brodsky, founder & director of the Boston-based accelerator.
Brodsky grew up around cooperatives. His father, Howard Brodsky, cofounded Carpet One, a purchasing coop for carpet sellers that grew into the largest retail floor covering company in the world. He was inducted into the Cooperative Hall of Fame in 2009. The younger Brodsky created the first purchasing co-op for bike shops in his 20s, before working at tech startups. He returned to the co-op world to cofound the Independent Brewers Alliance, a purchasing co-op for craft brewers that helps them buy bottles, cans, cardboard and other materials at lower cost.
The idea for the accelerator grew out of their father and son discussions about why there were not more big, successful cooperatives. Another inspiration was Nathan Schneider, author and instigator of the ‘platform cooperative’ movement, which aims to counter the one-sided nature of gig economy platforms such as Uber. “They need a way to help develop platform coops,” says Brodsky.
From Healthcare to Wine
After an open application process that drew more than 80 submissions from around the world, Start.coop has selected six coops to participate in the inaugural program, which kicks off in January. They could not be farther from the frumpy food coops of old.
The cohort includes Savvy Co-op, a healthcare data coop owned by patients; Driver’s Seat Data Co-op, a platform that aggregates and analyzes data for gig economy drivers; Core Staffing, a worker-owned cooperative staffing firm for returning citizens; Expert Collective, a cooperatively owned platform for academic experts; and RedHen Collective, a wine importer and wholesaler that pays farmers up front and shares profits with employees (RedHen is currently raising money via an investment crowdfunding campaign on Crowdfund Mainstreet).
In addition, the Arizmendi Association of Cooperatives, known for its worker-owned bakeries, is developing a hybrid cooperative of investors and workers dedicated to building affordable housing.
Start.coop’s 10-week program will provide mentorship, instruction on topics from cooperative governance to fundraising, and access to common tools and services, such as member management software, marketing and specialized legal advice. Based upon his interviews with applicants, Brodsky expects there will also be a lot of discussion about financing, particularly how coops can bring in outside investors without giving up member control.
Each participating coops will receive $10,000. But unlike tech accelerators, which usually take an equity stake in their startups, the coops will “pay it forward” by sharing a small percentage of their revenue to the program and future cohorts for ten years. That model was inspired by the Fledge accelerator, and is part of the Fledge network.
In keeping with the democratic spirit, all Start.coop participants will have voting rights and board representation.
Cooperatives are democratically owned and run organizations that benefit and share profits (or ‘excess revenue’ in coop parlance) with their member-owners. Members can be producers (Organic Valley, credit unions), consumers (REI, food coops), workers (Equal Exchange) or independent businesses (Carpet One). In some cases, coops represent multiple stakeholders.
Cooperatives have been around since at least the Industrial Revolution, when artisans and workers banded together against the powerful interests that controlled their fates. But they are enjoying a resurgence. A new generation of activists and entrepreneurs is interested in distributed ownership models that can address the growing inequality and concentration of power in the 21st century. But if the co-op movement is to reach its full potential, it will need help.
A more robust ecosystem to support co-ops is beginning to take shape. One notable example is a blueprint fund being explored by Transform Finance that could finance the transition of conventional businesses to worker-owned coops, especially as millions of Baby Boomers prepare to retire.
Start.coop could help a new breed of ambitious co-ops get off the ground and scale. “We want co-ops in the future to not feel like they’re doing this from scratch,” says Brodsky. He has raised $85,000 from partners including National Cooperative Bank, Equal Exchange, Cabot Creamery, and others to launch the accelerator, and hopes to raise another $50,000 before the program starts in January.”