Purpose Rounds are types of funding rounds for women, historically excluded, and impact founders. By utilizing Regulation CF and Regulation A, a Purpose Round functions similarly to a Community Round in the ability to leverage accredited and non-accredited investors but sets itself apart by mobilizing an entire community specifically around purpose. Pulse 2.0 interviewed Purpose Rounds founder and Renew VC General Partner Mark Hubbard to learn more.
Mark Hubbard’s Background
What is Mark Hubbard’s background? Hubbard said:
“With three decades in venture capital, global private equity, and institutional asset management, I’ve had the privilege of founding, investing in, and mentoring thousands of enterprises, ranging from startups to global corporations. Throughout my career I have directed billions of dollars in capital, established one of China’s most successful asset management joint ventures, and launched a global private equity firm. Additionally, I’ve built innovation centers for cities and states, always with a focus on creating lasting impact.”
“Long before “Impact investing” became a buzzword, I was deeply involved on both the founding and funding sides of this space. My work has also been at the intersection of faith, theology, philosophy, and investing, where I’ve led initiatives that integrate these fields in meaningful ways.”
Concept For The Financing
How did the idea for this financing option for founders come together? Hubbard shared:
“The core of what we do as an institution is to help investors align their values with their money, and yet we are by law limited to working with Accredited Investors. The idea that only wealthy investors should have the opportunity to closely connect their beliefs to what their money accomplishes in the world feels like a justice issue to us. These fundraising rounds (defined as Purpose Rounds) are similar to crowdfunding or community rounds in that anyone can invest as little as $100 in a private company, but these offerings have purpose baked in at the center.”
“Though this structure provides significant benefits for founders, we discovered that there were two primary reasons why they might not pursue crowdfunding of any kind – complexity and expense. We wanted to create a way to come alongside our particular category of leaders to help them pursue this powerful idea.”
Core Thesis
What is the core thesis of a Purpose Round? Hubbard noted:
“A Purpose Round is any opportunity to mobilize a community of accredited and non-accredited investors to invest in a private company that either is led by a woman, historically excluded, or overlooked founder, or the business addresses a societal challenge (an Impact company).”
“Founders successfully drawing crowds of people to invest in their companies is exciting! That said, if a company can build real community among its customers and stakeholders instead, then bringing together that community to invest is even better than a mere crowd. What excited us from the beginning, however, was the idea that a community, activated in service of a Purpose, is something different — it’s powerful.”
Challenges Faced
What challenges have Purpose Rounds and the team faced in building the company? Hubbard acknowledged:
“Creating a movement – for founders and all investors (not merely the wealthiest) – comes with educating the market and clearly defining what it is we want to achieve. While equity crowdfunding has been a funding mechanism that founders have leveraged for some time, the industry had not yet defined a specific type of offering focused solely on women, historically excluded, overlooked, and purpose-driven founders.”
“These founders have been fundraising in this way for some time – we did not write the JOBS Act nor do we wish to gatekeep this activity, but by giving it a formal name – ‘I’m raising a ‘Purpose Round – our aim is to help founders broaden their communities and impacts by turning customers into owners.”
Evolution Of Purpose Rounds’ Thesis
How has the company’s approach or thesis evolved since launching? Hubbard pointed out:
“The thesis for Purpose Rounds aligns deeply with the work we already do at Renew Venture Capital – both our VC arm and Venture Studio. Now that we have a financing and support mechanism designed to back founders in this new way, we must evolve to “get the word out” – to engage and activate amazing companies and the investors who wish to back them.”
Significant Milestones
What have been some of your most significant milestones? Hubbard cited:
“We’ve assisted three Purpose Rounds offerings to date, representing different industries, community/customer bases, and business stages. The first, Parker Clay, had a successful offering to expand their vertically integrated luxury leather goods business that provides meaningful job opportunities, vocational training, and beyond-living wages for at-risk women in Ethiopia. More recently we have financed two additional offerings, a B2B retail home goods company that’s preserving centuries-old heritage craft (Mela Artisans) and a plant-powered first aid company that’s better for every body and the planet (All Better Co); both of which are live right now. These three showcase that Purpose Rounds span categories, business models and impact.”
Founder Success Stories
After asking Hubbard about founder success stories, he highlighted:
“It is frankly a win any time a company launches a successful Purpose Round, but there is something special about watching founders leverage this fundraising tool to address broken and inequitable systems. For example, it is well known that, though companies run by women often produce better outcomes, only two to three percent of venture capital funds are invested in female-led teams. It’s truly inspiring to see companies like All Better Co., founded by two amazing and resilient mothers, seek out the capital they need to grow and expand by opening the potential financial upside of their business directly to their customers and community.”
Differentiation From Other Funding Options
What differentiates Purpose Rounds from other funding options for founders? Hubbard affirmed:
“We partner with founders, assisting them in the development and management of the offering, including things like crafting their investment stories and bespoke websites. We also provide the capital necessary (often $200k or more) to engage vendors and begin a marketing campaign. I don’t believe this unique combination of resources is available elsewhere.”
Future Goals
What are some of your future goals? Hubbard pointed out:
“This activity is merely one small part of the work we do at Renew Venture Capital to invest in impact, women, historically excluded, and overlooked founders. In addition to our VC funds and Venture Studio, we intend for the financing of Purpose Rounds to be a vital resource for the gifted, driven founders in our particular universe.”
Additional Thoughts
Any other topics you would like to discuss? Hubbard concluded:
“Purpose Rounds can be a replacement or a complement to traditional venture capital and private equity. These offerings are an opportunity for like-minded everyday investors to align their money with their values and for founders to attract the expansion capital they need by transforming customers and community into owners and advocates. It’s an honor for us to come alongside some of these businesses to make the process easier to manage and to provide the best chances for success.”
