Last week, I was invited to speak on a panel about ownership at the wonderful and inspiring CoCap conference in Oakland. There was a question that came up, and that often arises when I speak about Uptima’s work – “Why did you choose to create a cooperative?”
As far as I know, Uptima is the first business accelerator that has been set up as a cooperative, where the people who go through our entrepreneurship programs, the people who teach and mentor in them, and to a much lesser extent, the investors that seeded them, can become owners of the accelerator. This week, in honor of National Coop Month, I thought I’d share the story behind how we started our cooperative.
Growing Up with Cooperative Economics
I didn’t know this at the time, but I grew up around entrepreneurship and cooperative economics. My parents came to the United States the year before I was born with a few suitcases, a few thousand dollars, and my brother. Then, they adopted me. With two children, my mom took on microentrepreneurial activities to help support the family. Similar to the stories of many immigrants, she banded together with the lady down the street to clean people’s houses.
At the end of the day, they would split the money they earned. On a very small level, this was cooperative economics in action, and it helped provide more financial stability for both of our families.
Getting Deep into the Financial System
Fast forward some years later, I got a great education but it put me into debt. So, I took a job in investment banking to pay it down. I had the intention of spending a couple of years in investment banking and then moving on to do something with positive community impact. But the ability to accumulate wealth through this job turned my 2-year detour into a 10-year career. I learned a lot about financial markets, and how big merger, acquisition, and financing deals got done. And, I found myself deep in the machine of Wall Street with a burning desire to get out and do something meaningful.
Making Education a Priority
The mortgage downturn gave me an opportunity to get out of investment banking. I thought about how I could redeploy my knowledge, skills, and talents to create positive impact. I felt like there were two defining factors in my success up to that point – my family and my education. So, I began to work with a startup education business. I drew upon my investment banking training to help structure and get financing for an innovative model in higher education.
Seeing the Challenges in Higher Education
Through that experience, I saw firsthand the challenges facing higher education. There are non-profit schools that have great missions, but are under-resourced and have governance practices that move slowly. And, there are for-profit schools that are backed by investors who often put pressure on growth.
As a result, we have a system where many graduates are underemployed with significant student debt.
Fundamentally, these challenges come down to conflicts of interest among multiple stakeholder groups.
An Idea for a Cooperative School
My co-founder, Seyed Amiry, had worked in finance and operations at agricultural cooperatives for many years before coming into executive leadership positions in higher education. He seeded an idea for a new school. What if we created a school using a cooperative legal structure? By providing a structure where students, faculty and staff, and investors all have ownership interests in the school, perhaps we could eliminate the conflicts of interest among the stakeholder groups.
This Idea is Disruptive, But We Can’t Fund It
So, we began developing plans for a cooperative school focused on helping people achieve financial stability through vocational training programs and job placement. We found a couple of schools that were interested in being acquired and converted into a cooperative.
We needed money to make that plan happen. I thought this wouldn’t be a problem.
After all, I had raised a bunch of money for an education startup before. We put together our pitch deck and started meeting with potential investors. Over and over we heard, “This idea is disruptive. We think it would solve the challenges in higher education. And, you’re the right people to do it. But we can’t fund a cooperative because of our investment fund structure – we need higher returns on investment and more control over decision-making.” Neither of which were aligned with a cooperative structure and values. So, we reached the end of a very long list of potential investors with no one to back us in this idea.
Engaging Our Community as We Pivot
I still thought this was the right thing to do. And, it’s the thing I can’t not do. So, I started thinking about a pivot. How can I do this in a grassroots way? What can I offer and teach people? I had been advising businesses my entire professional career and even worked on starting a few businesses myself.
I thought about what I wished someone had told me before I started a business, and the technical knowledge and emotional capacities that were needed to get from idea to funding.
From that, I created a business accelerator program offering that I took to community members for their feedback.
But, Do We Need More Entrepreneurship Education?
Looking across the entrepreneurship education landscape, there were some similar challenges. There are non-profit entrepreneurship programs that have great missions and programs, but are sometimes under-resourced as grant dollars and government funding are harder to come by. And then, there are a growing number of for-profit accelerators that are very selective in providing deep support and an equity investment only in certain types of high-growth businesses that have the potential to provide significant returns to their investors. As a result, a lot of people in our communities who have ingenious business ideas are not receiving the support they need to at least try them out.
A Cooperative Was Born
In February 2014, we launched the Uptima Business Bootcamp. We started lean with a diverse cohort of 8 business owners in Oakland. I was writing lectures and business development activities the night before each class. Each week, participants provided feedback and lifted up the program with their friends. Because they knew they had an opportunity to become cooperative owners of the accelerator, they took ownership in shaping our program, processes, and culture, and in building our community.
From those grassroots, we’ve grown to around 250 participants in our programs and are starting to create a network with our second location in San Francisco.
How Our Cooperative Works
Each Uptima accelerator is a multi-stakeholder cooperative comprised of worker members, accelerator program members and investor members. Our worker-members are the staff, who run the day-to-day operations of the business accelerator, as well as the instructors and business mentors, who support participants in building thriving businesses. Our accelerator program members are participants in business accelerator programs who have met all the membership requirements for their program. And, our investor members are individuals who provide the capital for our business accelerators, enabling them to exist and be financially sustainable.
Members are investing in a business accelerator that shares wealth with its community by providing a share in the profits of the accelerator.
And, members have the opportunity to participate in shaping their cooperative by directing and influencing its policies and by electing and/or serving on its Board of Directors.
Why This Matters
We talk about how entrepreneurship can build wealth. Through our cooperative structure, we can compound those wealth building activities. Not only do our cooperative members own their businesses, but they own their business accelerator. And through that, they are literally investing in past, present and future businesses in their community.
“Each Uptima accelerator is a multi-stakeholder cooperative comprised of worker members, accelerator program members and investor members. ”
Sounds wonderful 🙂
I’ve hopes to start something very similar in the UK one day…
Could you perhaps share your teaching resources/ handouts etc? 🙂
Thanks in advance,
Thanks for your inspiring story Rani.