Instead of IPOs and acquisitions, exiting to community is one alternative

Through the Exit to Community project, Schneider is exploring ways to help startups transition from investor-owned to community ownership, which could include users, customers, workers or some combination of all stakeholders.

So far, Schneider says he has identified three different ways to go about doing this.

The tech industry is built on the venture capital model where hockey stick growth and selling to a larger company or going public are markers of success. But the traditional VC model does not leave much room for startups that might not be the next unicorn but still generate revenue — just not the type of returns investors are looking for.

The second potential conversion strategy is the creation of a federation. In this scenario, a company could reorient itself toward the community by distributing decision-making powers to moderators and users of the platform. In order to seamlessly do this, the startup would need to first convert to a benefit corporation. The third option involves t... See more

“The idea with exit to community is how can you create a model where the whole point is to create a vibrant community that will become its eventual stewards,” Schneider tells TechCrunch. “It seems like a natural fit, especially in a moment where we’re looking for increased accountability and the wealth distribution problems in the startup economy."

The first is a stockholding trust, inspired by more traditional employee stock-ownership plans in the U.S. The goal of the trust would be to acquire 100% ownership in the company over a period of time by buying out pre-existing outside investors.