26th September 2016Feature
Why and how is Repositive a social enterprise?
The two questions I get asked the most from other entrepreneurs are about why and how Repositive is a social enterprise. I hope my summary below is useful - let me know your thoughts.
Why is Repositive a social enterprise?
Repositive was spun out of the charity DNAdigest to implement a mission that supports the same mission as the charity - to enable and incentivise, through the development of software tools, efficient data access and ethical data sharing in genomics research for the benefit of patients.
I felt strongly about the mission of the charity and was at first hesitant to create a commercial company to implement the mission - I thought only charities have purposes of social impact and that businesses are cut-throat about the money - but I learnt of other models for running a business, the concept of social enterprises or social ventures.
The concepts "social enterprise" and "social venture" do not describe a particular legal entity, but rather a philosophy of how to run a business. Social enterprises are businesses that have a clear vision for how they will create an impact in the world for example social impact or environmental impact. We recognised that this is the perfect fit for Repositive - we want to make an impact for genomics research to make a positive impact for finding treatments and cures for patients. Also, I knew that to build and run a company that I could be proud of, it is important for me that the company incorporates the mission and values that I feel strongly about.
How is Repositive a social enterprise?
There are many different ways of implementing a social enterprise, and the legal form of the organisation can be anything from a registered charity to a company limited by shares. In recent years new legal structures for social enterprises have emerged that allow the social mission to be documented in the incorporation of the company.
When Repositive was spun out of DNAdigest to become an independent company we choose for the social enterprise organisation structure where:
- Repositive is a company limited by shares
- The social mission and values of Repositive are incorporated in our articles of association
- The social mission and values of Repositive are protected by a supermajority clause
The benefit of choosing this model for us is that as a regular company limited by shares we are able to raise investment in return for equity in the company, and doing so enabled us to get Repositive off the ground. We knew that incorporating as a company and raising investment is a model that would allow us to build the vision we have for Repositive without being dependent on e.g. grants and donations before we would be generating revenue from customers.
Mission, values and benefit corporation principles
When we incorporated Repositive, we brought the team together to describe in words our mission and vision for the company and included these in our articles as Schedule 1. In addition to our Repositive-specific mission and values, we have also chosen to incorporate the principles of a Benefit Corporation (B-corp) principles: company decisions are taken in consideration of People, Planet and Profit. Since our incorporation, the B-corp movement has been launched in the UK, and it is now possible for UK companies to be officially B-corp certified (we have not done this yet). All mentions of the mission, values and benefit corporation principles are gathered in our Article 3 of our articles of association.
To protect our commitment to the Repositive mission and values, the articles paragraph 3.6 are implementing a supermajority clause, ie. at least 90% of shareholder votes are required to change any provisions in all of Article 3:
"3.6 Notwithstanding anything to the contrary in these Articles, no change which has the effect of repealing, amending or otherwise affecting the operation of the provisions in this Article 3 of these Articles may be made otherwise than by a resolution obtaining the affirmative vote of shareholders present in person or proxy at a general meeting, or by the written resolution of shareholders, in either case holding at least 90% of the then-issued shares in the Company."
In addition, our shareholders agreement include a reference to the mission statement to ensure that by signing up as a shareholder, investors are in agreement with the requirements of Article 3:
"COVENANTS BY ALL PARTIES The Parties agree at all times to comply with, and cause the Company to comply with, the Articles of the Company and in particular with the requirements of Article 3."
We were featured in a case study about legal structure of social enterprises in this report by Taylor Vinters and Simprints: Building a Social Enterprise - the Legal Landscape
Advice and support for social enterprises
Throughout the journey of DNAdigest and Repositive we have received a lot of advice and support from initiatives and organisations that support social enterprises and social entrepreneurship:
- We went through the Wayra UnLtd London accelerator for social enterprises
- We have been incubated by the Social Incubator East (now Cambridge Social Ventures)
- We have received support and advice from the Big Venture Challenge including £100k matched funding in our first round of investment
- We have raised investment from angel investors who care about impact - connected to us via ClearlySo
I want to take this opportunity to say a big warm thanks to all the advisers and mentors who may be reading this - your help and support is invaluable!
If you are seeking out other social enterprises and other social entrepreneurs to discuss how they set up their social enterprise, check out the hash tag #socent on twitter.