Context:

The Collaborative Technology Alliance is a collective of social technology builders with a common commitment to a set of principles our members pledge to keep. One key issue for those interested in building sustainable socially cohesive technology is how to negotiate developing business model.

As part of the 2023 Collabathon, Laure X Cast submitted a proposal to develop a repeatable legal structure that could enable prosocial tech companies to stay purpose driven alongside being funded. This document is an extended version of that proposal.

Traditional ways of building scaleable social tech (VC-backed, hypergrowth-oriented, unaccountable) have led to a host of unintended and negative consequences. Might we be able to imagine a business model, starting from scratch, that could become a blueprint for other teams and projects who are interested and willing to put aside the idea of becoming a “unicorn” but still committed to making a huge impact, doing so in a way that reflects the principles we share?

For this to work as a model, it needs to be particular enough to accommodate a certain group of teams, funders, and purpose while being open enough to be useful as a jumping-off place for other teams, funders, and purposes. Our goal is to find a way to create a viable funding structure for early tech projects that protects purpose from being subjugated to profit.

Introduction:

The Collaborative Technology Alliance brings together technologists from many backgrounds with many different visions for how tech may be built. Among technology builders in the CTA and beyond, there’s a major challenge in resourcing, especially for technology that puts social impact above hypergrowth and investor returns.

We think there are possibilities for reshaping the system, starting with an experiment with just a few people and projects, learning in public, and working with legal and financial experts to create a repeatable model and open legal templates.

Problem Statement:

CTA members are well aware of negative downstream effects of building tech within the traditional social tech ecosystem:

1. Incentive structures that put speed and growth above sustainability and responsibility
2. Frequently, a shift away from mission into profit as companies grow and “compete” in winnner-take-all framings of a marketplace
3. Disregard of people who use the products, especially those from marginalized identities or backgrounds that are under-represented among those who build tech, partly as a result of deeply inequitable representation among those funded
4. Reinforcement of extractive approaches in general that typically lead to exploitation of common resources (including people’s attention and time) in service of only a few people receiving benefit
5. So-called “unintended consequences” of building features designed to reinforce commodification of identity and ‘hook’ people into more frequent use of the technology

We’re also aware of some of the challenges that working within the traditional ecosystem both addresses and creates:

1. Software designed to scale has large up-front capital costs typically with at least a 2-3 year timeline before meaningful revenue is captured, often more in the 5-7 year timeframe, even with investor backing.
2. Early stage budgets are high due developer costs and the need to pay for other kinds of 3rd party services that enable technology development to happen more efficiently and incrementally.
3. Early-stage investment is often difficult to access, especially for those in non-dominant groups and for companies that are not primarily focused on narrow and quickly-scaling problems that are easier to reason about in terms of quick and outsized returns. Inequity is magnified as more investment has shifted away from seed funding to Series A and beyond.