Solar Roadways has officially become another crowdfunding sensation. They’ve raised over $1 million USD on Indiegogo from over 25,000 people around the world, all to fund research, development, and production of solar panels that can be used to pave roads. This is amazing. This is wonderful. And it could all be soured if we hear in two years that they’ve sold out their backers and been bought by General Electric.
We’ve seen this movie before. Revolutionary startup turns to crowdfunding, thousands of people contribute, then two years later the startup gets sold to a huge corporation for billions of dollars and the backers get nothing. No say in the decision, not even a cut of the profits. This is what happened when Kickstarter-darling Oculus VR sold to Facebook.
Oculus’s backers were, understandably, furious.
The $2 million which the backers had collectively raised had all just served to make a few key Oculus people and investors very, very rich. If Oculus had been selling shares of stock, and their 9,522 backers had each bought in at an average of $210, then they’d each have $210,000 after the Facebook sale. These aren’t exact numbers, given that Oculus took extra venture capital after their crowdfunding campaign, but the principle is the same: the Oculus board and VCs made out like bandits, and the backers got shafted.
But it’s not really about the profits.
If this kind of a scenario were to happen with Solar Roadways, the backers would have even more of a right to be furious. Many of Oculus’s backers contributed money to receive a developer version of their VR headset, so these instances at least had the pretense of preordering a product. Solar Roadways, on the other hand, isn’t selling functioning solar panels to backers. At most they’re offering commemorative gifts like pieces of artwork or coffee mugs; the sort of thing you’d expect from a local public radio station’s fundraiser. And as of this writing, 30% of Solar Roadways’s backers haven’t elected even to get a bumper sticker, and are just giving a pure donation. None of the Solar Roadways backers are in this because they want to make money. They’d probably be shocked to find out that its founders are.
For a company that’s doing a not-for-profit-style fundraiser, you’d expect them to actually be a not-for-profit.
Judging by this investor-courting page that’s since been removed from the navigation bar on Solar Roadways’s website, it’s clear that they, at one point, planned to seek venture capital. Now that they’ve raised a million bucks through crowdfunding, they really ought to consider another option.
There’s still a legal minefield around giving equity in a company to crowdfunders, so it’s understandable why Solar Roadways isn’t offering a return on their backers’ investment in the event that they get acquired for billions of dollars in the future. The backers aren’t even interested in that return on investment anyway. But there’s another solution that’s in the exact same spirit of Solar Roadways’s stated goals of being revolutionary and sustainable. They could reorganize as a cooperative.
The Solar Roadways backers should have a right to dictate the company’s future. They can enable this by giving every one of their 25,000+ backers a right to vote on company decisions. One person, one vote, are how cooperatives work; it’s not related to how many “shares” anyone has. There’s already tried-and-true legal structure enabling a cooperative’s “customers” to become its members, and Solar Roadways can make use of it.
Really, this is all the Oculus backers ever wanted. The fact that they didn’t get a slice of the 2 billion dollar pie stung, sure, but the real injury was the fact that their company — the one they felt and believed they had a stake in building, which is basically the entire appeal of crowdfunding — had been taken away from them.
By promising its backers not a share in the profits, but a say in its direction, Solar Roadways can ensure that it always lines up with the public interest in its mission to pave the world’s roads with renewable energy, and that its owners or other investors are never able to compromise that mission in any way in the pursuit of their own profit. It would be fitting if the company that hopes to literally pave the way for ecologically-sustainable energy also had a more ecologically-sustainable business model. After all, the social and financial world are ecosystems too.
In becoming a cooperative, would Solar Roadways scare away self-interested VCs and investors? Probably. That could be a challenge for a project as massive as paving solar panels into millions of miles of roadway. But they’ve already achieved amazing things on a shoestring budget, and now, especially, by depending on the power of a big swarm of enthusiastic people. Who’s to say they can’t go even further by doubling down on that?