Investor Owned vs. User Owned Platforms

by Austin Robey

Traditional startup roadmap

Investor ownership is the default for technology companies and startups. Typically, founders go from owning 100% of a company, to gradually selling more and more in sequential fundraising rounds. Often, investors will purchase 20-30% of a company in each round of funding. After several rounds of funding, investors are likely to own a vast majority of the business, many times over 80%.

It may look something like this.

Seed:

Company raises a seed round by offering investment notes that convert to 10-15% ownership of the company.

Series A:

Company raises 18 months of runway by selling another 20% of ownership to a collection of VC firms.

Series B:

Company repeats cycle.

Series C, D, E (and beyond):

An alternative: User-owned platforms

There is an alternative. It may not be customary in Silicon Valley, but it’s possible to have platforms owned 100% by their users. How? 

1. Cooperative ownership: 

• Organization incorporated as a cooperative

• Fully member-owned 

• Not created for an exit opportunity for investors

• 1 person 1 vote governance, not power weighted by stake

2. Labor organization:

• Organization and product built by users

• People contributing towards a shared vision

• Reliance on production capital, rather than financial capital

Investor ownership vs. user ownership

Here are what these differences look like:

Would you rather be a user or an owner?