Tech Figures Join to Fund Change.org Petition Site
In a twist on how Silicon Valley companies are financed, several technology luminaries have banded together to effectively do the work of a traditional venture capital firm.
Others in the group include prominent business leaders like the billionaire Richard Branson, eBay co-founder Pierre M. Omidyar and LinkedIn co-founder Reid Hoffman. In all, two dozen investors are contributing $250,000 to a few million dollars each.
“It would have been a lot more straightforward to raise money from a single institution,” said Ben Rattray, Change.org’s chief executive. “But we had a group of people who are passionate about our mission and who had experience building global enterprises, who we can turn to for advice.”
Change.org lets users create online petitions that call on governments and companies to act on specific issues. One recent campaign, begun after Michael Brown’s death, calls for police in St. Louis County, the city of St. Louis and Ferguson, Mo., where Mr. Brown was killed, to wear body cameras. It quickly received more than 130,000 signatures.
Another campaign, started after Unilever sued a start-up food company that makes a mayonnaise alternative, called for big companies to “stop bullying sustainable food companies.” It garnered more than 100,000 supporters in less than a month.
Change.org had already raised nearly $20 million, most of it in a $15 million fund-raising round last year. The new infusion of $25 million will be used to expand the company’s engineering team, invest in mobile development and expand a tool that allows the businesses and politicians who are the targets of petitions to engage with users.
“We want a world where elected representatives can openly and authentically connect with their constituents at scale,” Mr. Rattray said.
Among Silicon Valley start-ups, Change.org has a reputation for being a progressive, mission-driven company. Despite having a dot-org web suffix, it is a for-profit company.
But it is a benefit, or B, corporation, a distinction that allows it to make decisions based on what is good for society, not just what is good for its shareholders. This year, for example, Change.org announced a generous new parental leave policy for its employees.
“B corps are different than traditional corporations in that they have higher standards of social and environmental performance, accountability and transparency,” said Andrew Kassoy, a co-founder of B Lab, which certifies such companies.
Other start-ups including Etsy and Kickstarter are B corporations. And divisions of some big public companies, like Ben & Jerry’s, which is owned by Unilever, have received the certification.
Change.org did not say how much investors estimated the company was worth with this latest round of financing. Though many prominent start-ups have been pegged as being worth tens of billions of dollars, Mr. Rattray played down the importance of Silicon Valley companies chasing higher valuations.
“Some C.E.O.s become overly focused on building the valuation, instead of building the company,” he said. “We want the proxy for our success to be the victories of our campaigns.”
More than 80 million people worldwide are using the site. A majority of new users are from abroad. This year, a petition to spare a Christian Sudanese woman from being executed attracted more than a million supporters. The woman, Meriam Yehya Ibrahim, was freed this summer with help from the Italian and American governments.
The pooling of so many investors in Change.org’s latest round recalls the angel investing model, in which investors typically put in much smaller amounts to finance fledgling companies, at a much large scale.
But it is unusual for a group of investors to commit so much money that funds from a traditional venture capital firm are unnecessary. Last month, ZenPayroll, a San Francisco start-up, was among the few companies to do something similar, with more than 50 individual investors participating in its latest $20 million fund-raising round.
Mr. Rattray said having this prominent group of investors support Change.org would give him access to a network of advisers who could help guide the company as it continues to grow.
“These are people who recognize the power of the Internet,” he said. Others in the group include Sam Altman, the president of Y Combinator, the tech incubator company, and Michael Birch, co-founder of Bebo, a former social media site.
Because the money comes from individuals, not a venture capital firm with a specific time frame for getting a return on its investment, Change.org will not be under pressure to go public or sell quickly, Mr. Rattray said.
“The reason we want mission aligned investors with long-term horizons is so we can focus on the product,” he said.
Mr. Yang, the Yahoo co-founder, said he was not looking for a quick flip. “Investing as an individual allows for a different time frame for an investment to mature,” he wrote by email. “For me, Change.org is a long-term investment that is aligned with the company’s mission and its vision for continued growth as an independent business.”
One repeat investor in the round is Omidyar Network, which represents Mr. Omidyar. It had invested in Change.org, and supported the unique fund-raising approach.
“We wanted to see the organization broaden out its sponsorship and sources of capital” with “individuals who look like institutions and can write meaningful checks,” said Chris Bishko, an investment partner at Omidyar Network.
Mr. Bishko called Change.org “a global platform that is giving ordinary people a stronger voice on how things operate.”
“This is an incredible innovation, and we’re just at the tip of the iceberg,” he said.
But petitions are not all that Change.org aspires to organize. Mr. Rattray said he hoped it would also become a platform for organizing voting, fund-raising and more.
“Petitions are to Change.org as books were to Amazon,” he said.
A version of this article appears in print on 12/09/2014, on page B3 of the NewYork edition with the headline: Tech Figures Join to Fund Change.org Petition Site.