2020: The rise of B Corps?

Joey Dean
Feb 7th
2020: The rise of B Corps?

What do an aeroponic vertical farm, a direct-to-consumer footwear company, and a pea-based dairy alternative company all have in common? Aside from being venture-backed startups, these companies are also Certified B Corps.

What is a Certified B Corp?

B Corp Certification is a designation given to companies that meet the highest social and environmental standards, public transparency, and legal accountability. B Corp Certification is considered the functional equivalent of Rainforest Alliance, LEED, or Fair Trade labels. To become a Certified B Corp, a company must incorporate as a benefit corporation, a corporate structure that obligates a company to consider the impact of business decisions on all stakeholders and not just shareholders. Additionally, Certified B Corps are periodically evaluated  by B Lab, a non-profit organization that helped create the framework for the benefit corporation structure and B Corp certification. B Lab’s assessment covers topics including corporate governance, treatment of workers, community outreach, and environmental impact of the business. Currently, there are over 2,500 Certified B Corps worldwide including Patagonia and Ben & Jerry’s.

A B Corp Certification allows a company to pursue objectives that may not be profit-maximizing but will ultimately better the company’s overall stakeholders. While traditional corporations are not legally bound to maximize economic benefit to shareholders, a growing number of companies have adopted a corporate governance style known as “shareholder primacy”. Shareholder primacy is the notion that directors of a company may be in breach of fiduciary duties if a company is not maximizing profit for its shareholders. B Corp Certified companies must engage all parties that their business affects, which affords them the power to make decisions that are socially beneficial but not necessarily profit-making.

B Corps in the Startup Landscape

As the venture capital world shifts focus from growth-at-all-cost to unit economics and profitability, startups may seek B Corp Certification as a way of demonstrating verified efforts that focus on more than just growth. Below are three examples of B Corp Certified startups aiming to “change the world” while generating profits for shareholders.

Aerofarms

Aerofarms is an urban agricultural company that builds vertical aeroponic farms to grow leafy greens and herbs without using sun or soil. Aeroponic growing operations are environmentally friendly, as they use 95% less water than field farming and 40% less than hydroponics. Additionally, Aerofarms claims to use less than one percent of the land required by conventional farming, which equates to farms that yield up to 390 times more crops per square foot. Aerofarms believes that aeroponic farming is an effective solution to soil degradation, water contamination, and overuse of pesticides.

According to Crunchbase, Aerofarms has total funding of $238M, including a $100M Series E funding round. Aerofarms was founded in 2004 and is backed by investors including Ingka Group (IKEA Parent company), MissionPoint Capital Partners, and GSR Ventures.

Allbirds

Allbirds is a New Zealand-American footwear company that makes environmentally friendly footwear. Allbirds crafts their shoes using materials sourced from farms that are third-party verified to meet environmental and sustainability standards. Allbirds uses materials including Merino wool, sugarcane, and tree fiber that reduce the typical shoe manufacturing carbon footprint.

 Allbirds seeks to benefit the world through the development of low-carbon footwear manufacturing materials. In 2018, Allbirds developed a shoe sole material called Sweetfoam in a partnership with Braskem, a Brazillian manufacturing company. Traditionally, shoe soles add 1.8 tons of carbon into the atmosphere during production; Allbirds’ sugar-cane based Sweetfoam actually removes two and a half tons of carbon during production. After developing the Sweetfoam sole technology, Allbirds open-sourced its production process for the foam and has introduced more than 100 footwear brands to Braskem. According to a January 2020 Fast Company article, at least 20 of these brands will release shoes in 2020 with the sugarcane-based foam. Last month, the company announced it would be raising a $75M Series D funding round to invest in regenerative agriculture.

Prior to the recently announced funding round, Allbirds has raised total funding of approximately $77.5M. Allbirds was founded in 2015 by Joseph Zwillinger and Tim Brown, and is backed by investors including T. Rowe Price, Fidelity, and Tiger Global Management.

Ripple Foods

Ripple Foods develops dairy alternative products from yellow peas. According to Ripple, many Americans are overweight, yet undernourished. Ripple believes that it can solve this problem through the sale of milk made from yellow peas due to its high protein and mineral content when compared to dairy. Ripple milk also contains half the sugar of dairy milk and is lower in calories. Ripple currently offers milk, yogurt, sour cream, and a variety of other products

Ripple believes that its main benefit to the world is the energy and resource savings when growing yellow peas compared to cows, almonds, and other dairy-alternative ingredients. According to Ripple, it takes 100x more water to grow almonds than yellow peas and 25x more water to produce dairy milk than pea-based milk. Additionally, Ripple claims the amount of emissions released to produce an equivalent protein level for yellow peas is less than 0.33lbs of C02e (carbon dioxide equivalent), while almonds and cows produce 1.6lbs and 16.6lbs of C02e respectively.

Ripple was founded in 2014 by Adam Lowry and Neil Renninger and is headquartered in San Francisco, California. The firm has raised approximately $120.6M in funding and is backed by investors including Euclidean Capital, GV, and Prelude Ventures.

So, will 2020 be about the B?

Without a magic 8 ball, our guess is as good as yours if B Corp startups will see a true revolution this year in the tech world. There is no guesswork needed however, to know that there is an ocean of promising technology built by companies that hope to make a wave of change.
 
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