Exit to Community

By Yichen Feng

Earlier this year, I joined a small group of stakeholders in and around the venture ecosystem to workshop the concept of an “Exit to Community” – a vision for startups aiming toward ownership by their users and key stakeholders. 

Despite spending many years with early stage and late stage companies in the technology space, a “community” exit wasn’t a line of inquiry I had ever considered. The concept of community can take so many shapes — users, paying customers, shareholders, etc. As a thought experiment, what are other ways of ensuring returns besides acquisition or IPO?

I was intrigued.

At Lumos Capital, we bring a critical analysis of what conditions humans need to live out their full potential. We know that investing in human capital includes consideration of the health of the learning, technology, and wealth building opportunities in our institutions. When we think about education and workforce development, we take a comprehensive look at what schools, colleges, employers, and the state can offer everyday citizens and workers.

Right now, VC- and PE-backed companies are under growing scrutiny for how they make these opportunities available for their employees while delivering value to their shareholders. It’s clear that we need examples of better institutionalization of human capital centered frameworks of doing business. The examples pulled together from policy research, entrepreneurs who have experimented with an Exit to Community — an “E2C” — and popular education are shared in this zine to inspire a new generation of company builders.

E2C is a strategy in the making. It's a different kind of story, one that connects the founders, workers, users, investors, and supporters who have been trying to feel their way toward a better kind of startup. Its endgame is to be a long-term asset for its community, co-owned and co-governed by those who give it life. 

It’s been a learning journey for myself, in my role at Lumos, and a complementary one. The companies we back are defining categories in human capital development, and so should my ability to innovate in supporting the communities they serve. 

Alongside a group of other investors, entrepreneurs, lawyers, and accountability experts, I co-wrote this 74-page exploration of E2C, from concept to case studies. Consider what companies you work with might do to expand their capacity to return value to all stakeholders.