EFCO member Rally Software hosted over 100 people last night for our first ever Summer Startup Happy Hour. Attendees included EFCO members and sponsors, and participants and mentors from TechStars, Unreasonable Institute, and Startup Summer. The agenda included several rounds of ‘speed-dating’ to facilitate cross-program networking and finished with recognition of our most recent member contributions – bringing our total community impact to over $500K! We also welcomed new members and heard from our community foundation partners about their latest focus areas.

Thanks to all who showed up – and if we missed you, check out the great local coverage (Daily Camera, BCBR, BCBR) we received and be sure to join us next time!

EFCO Press Release 7.11.12

Boulder July 11,2012 – Entrepreneurs Foundation of Colorado (EFCO) today announced a grant of unrestricted funds to The Community Foundation Serving Boulder County and Rose Community Foundation. The grants, totaling more than $430,000, were made possible by a contribution of profits from Foundry Group and TechStars and the recent initial public offering (IPO) of Jive.

Established in 2007, EFCO is a network of Colorado entrepreneurs whose companies have joined together to give a portion of their founding equity or a portion of their yearly profits to the community. EFCO received equity in Jive when the EFCO member company, Filtrbox, was acquired by Jive in 2010. Foundry Group, a venture capital firm focused on investing in early-stage information technology companies, has endowed EFCO with a portion of its carried interest.  Foundry is the first VC firm in the country to provide community funding through the EF Network. TechStars, an accelerator program that provides mentoring and investment to startups, also joined EFCO with a commitment of an annual percentage of profit.

“With the increasing activity in mergers and acquisitions, as well as favorable public market offerings, we’re finally witnessing the entrepreneurial seeds of giving and corporate social responsibility that we sowed in the last decade,” said Ryan Martens, Board Chair of EFCO and CTO of Rally Software. “It’s starting to bloom into real community benefits in Colorado. With Foundry and TechStars’ gifts and Jive’s IPO, the grant to EFCO will generate an incredible community benefit that will be felt both in Denver and Boulder for years to come.”

Realizing cash is limited with start-up companies, EFCO works to encourage entrepreneurs throughout the region to earmark equity for their community early in a company’s inception. Upon a private sale or initial public offering, these shares become liquid and transfer into the community. These grants are typically 1 percent of early equity or 1 percent of profits. During the past 13 years, the Entrepreneurs Foundation Network, of which EFCO is an affiliate, has partnered with more than a thousand companies across the United States and Israel.

Together, Foundry Group’s, TechStars’, and Jive’s contributions will amount to $430,073. The Foundry and TechStars gifts are part of long-term commitments to EFCO. The organizations will continue to receive a portion of proceeds from future exits in the Foundry and TechStars portfolio.

“We’re honored that our initial commitment through EFCO has allowed us to make such a significant contribution to our community,” said Seth Levine, managing director of Foundry Group. “We encourage other VC firms to consider EFCO as a way to begin their own philanthropic program.”

“It’s reassuring to know that our contribution through Filtrbox allows us to leave a permanent mark on our community,” said Ari Newman, founder of Filtrbox and former vice president at Jive.

“We’re so appreciative of Foundry Group, TechStars, Filtrbox and Jive for their support,” said Josie Heath, president, The Community Foundation Serving Boulder County. “Gifts to the unrestricted grantmaking funds of community foundations are visionary because they are invested strategically in nonprofit organizations that are making the most impact on pressing local issues.”

“We’re pleased to have been selected to receive this generous grant from Filtrbox,” says Sheila Bugdanowitz, Rose Community Foundation president and CEO. “We appreciate when businesses choose to partner with us by contributing to our unrestricted grantmaking funds. This allows Rose Community Foundation to use its local expertise to make strategic philanthropic investments in our community and demonstrate that businesses can and do play an integral part in helping solve community needs.”

The timing of these gifts is particularly sweet for The Community Foundation Serving Boulder County, as they come in the final months of a four-year campaign to double the grant-making impact of the Foundation’s unrestricted grantmaking fund, The Community Trust. With these gifts, the campaign has drawn within $250,000 of its $4 million goal.

Last week in the Denver Business Journal, Bruce Goldberg helped us announce changes to the EFCO model that expand support beyond just 1% of equity for fast growth companies, to include 1% of Profit in LLC, LLP and S corporations.
Based on a review of other Entrepreneur Foundation Affiliate models and a desire to increase our reach and services, our board voted to expand the membership model for EFCO. Beginning in March of 2010, we now have two different membership models and an optional membership fee.

• For equity-financed, high-growth companies, we continue to offer the 1% equity model. This model works through a warrant mechanism that executes at change of control.
• For partnership and profit-centered businesses, we are now offering a 1% of profit model. This model allows more profit focused firms to donate 1% of annual and/or 1% of liquidation profits to EFCO. This mechanism operates through non-binding promissory note.
• For all members, we have created a new EFCO operating fund at the Community Foundation serving Boulder County. This is now an optional, but default, 10% allocation to this fund for all new members. We will use this fund to operate EFCO and provide services in the forms of community volunteering, marketing and education services.
• For all members, we have created an optional membership fee. Like the new EFCO fund above, these fees will fund services in the forms of community volunteering, marketing and education services. These modest, $1,000 to $3,000 per year fees, directed at the large members (greater than 50 employees), will be instrumental in helping grow an income stream with a goal of hiring a part-time Director in 2011.

We are thrilled with the impact we have had in the local community in our first three years. We hope these changes will allow us to spread this culture of giving and philanthropy to a much larger community of Colorado businesses. These models are working at other EF Affiliates around the country and we believe it will work here in Colorado.
Thank you so much for your support. Let us know if you have any questions.
Ryan

At the Entrepreneur Foundation’s Corporate Citizenship conference, Mark Kramer gave the keynote address to room full of Entrepreneur Foundation affiliates and corporate philanthropy folks. I was fortunate to personally met and chat with Mark at the CEO breakfast put on by Bill Campbell of Intuit and Justin Kitch of Homestead.com/Intuit at the Synopsys headquarters.
As I mentioned before, this was a great event with tons of practical advise for folks working to integrate philanthropy into their company and corporate culture. In addition, the conference could not have started at a more strategic level with Mark’s talk. Mark is a co-founder of FSG with Michale Porter. Their first paper from 12/06 in HBR on the link between competitive advantage and corporate social responsibility sent me back in time to my MBA classes. It is strong paper for folks schooled in Porter competitive differentiation framework. His lecture leverage work from 2006 with his newest paper. “Changing the Game,” can be found at Standford as part of their Social Innovation Review. This paper continues the discussion about the use of strategic Corporate Social Responsibility (CSR) to help companies differentiate. The discussion of offensive and defensive efforts was a great model for me. I am really interested in getting EFCO companies to take a offensive approach to CSR even when they are small. What is more interesting is the implications this approach has on integrating social responsibility into the business and on mental models of non-profits who work should work with these corporations. I was floored by the BP example in the paper.
I have recommend this paper to no less than 10 people, since I returned from the conference.

Good article by Mike Cote in Coloradobiz on EFCo titled Startups put stock in Colorado.

Tim Wolters, founder / CTO of Collective Intellect (one of founding member companies of the Entrepreneurs Foundation of Colorado) has a post up on his Beyond Dante website describing why he’s excited about the Entrepreneurs Foundation of Colorado.

Larry Orr – a General Partner at Trinity Ventures and an Enterpreneurs Foundation board member – discusses his views on the value of the Entrepreneurs Foundation.

Techrockies (a web site for high technology news and information for the Rocky Mountain Region) has an interview up with Brad Feld regarding the Entrepreneurs Foundation of Colorado.  It’s a good overview on the goals of the program.