Comment by cies
2 years ago
It's inherent to the way a coop works that it's not possible to follow the same path. There is no 7% equity to be given, only the repayment of a loan. The coop model does not promote taking risk and hence have many fail, yet a few grow very quick.
Another problem is law. At this point it favors the common ownership forms of business. Starting a coop is hence much harder than it should be. This is what i think where the "it's a shame" make most sense. We should make w-coops easier to start and give them tax benefits as they are on the long run much more beneficial/ less detrimental to society.
A possible model is to divide your shares into ownership/control class shares (reserved only for workers) and profit shares which can be bought/sold by third parties. This gives workers ultimate control over the venture while allowing third-party investment. I don't know if this has been implemented anywhere, but it's a possibility. It's not going to fuel explosive growth like VC funds do, but TBH I'm finding as I get more experienced that those types of ventures generally end up being trash dumpsters once the honeymoon phase is over.
If you invest you want some control. The law is very clear (lots of preceding cases) on your power as an investor in case of equity investments. In case of w-coop investment constructions as you mention the law is very unclear. Hence usually they start with basic loans (sometimes that the initial workers bare some responsibility for) or gifts.
I agree with many VC-backed startups develop toxic behavior.
This is possible. I work at a worker owned cooperative with roughly this model.
I'm not a finance person, but my understanding is that co-ops more often raise capital with traditional loans.
While I believe you are correct that co-ops are not a great fit for the growth business strategy that VCs make their bread and butter on, I believe that on many metrics co-ops tend to be more sustainable than the corporate alternatives[0]. This means they are more likely to be around tomorrow to pay off a loan.
All this to say, it would be great to see more capital for co-ops in the form of traditional loans with favourable interest rates.
[0] https://www.theguardian.com/social-enterprise-network/2014/m...
> All this to say, it would be great to see more capital for co-ops in the form of traditional loans with favourable interest rates.
Sure, that would be great. But what can govt do today to incentivize that?
I'd say just relax (tax) law on w-coops to incentivize them compared to the less favorable forms of incorporation.
Especially in Canada, where capital is tight and productivity is low, I think incentivizing co-ops is a great idea.
The Canadian gov't offers some grants for co-ops, but they are a pittance. Making debt cheaper for co-ops relative to corps (maybe via additional tax breaks on interest?) is, I think super important.
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Are there countries with legal structures more friendly to worker coops?
For example I know Germany has structures like works councils that are foreign to us in N. America (though this is not a worker coop structure). However these structures historically arise from labor movements, not from top-down planning from authorities or electoral politics, which takes more than thinking up a design for a better society without considering who and why it would be implemented
I suspect that be in the more socialist countries.
Cuba has many, but also usually are state initiated and somewhat state controlled. China, Vietnam and DPRK have many "not true worker coops" also due to state control.
Finland, Italy and Basque/Spain also score high, and we're talking about actual worker coops there.
Yeah I'd imagine it would have to be a single holding company that has members join, instead of investing for equity.
So as an example you could have hypothetical opensource.coop that funds open source projects like signoz or posthog, giving the team a year of runway in exchange for a cut of future profits, with follow on funding if certain milestones are reached.
Same could work for "indie hackers" or boostrappers, merge a few successful companies into a holding company that shares office space, accounting, legal and etc, and reinvests a fixed % of profits to seed new projects that apply to join.