Upside finds novel way to help startups share the wealth

The Upside Foundation of Canada, a Toronto-based charity launched in 2013 by a group of entrepreneurs, investors and other professionals, has devised a plan for encouraging Canada’s high-growth companies to share their good fortune with others.

A clue to the strategy is in the organization’s name. Upside provides a platform for startups and other business ventures to donate not cash, but the “upside” of their realized winnings when they achieve a major exit through an IPO or an acquisition.

Companies participate in Upside by pledging stock options or warrants. When a liquidity event takes place, the foundation sells these for cash and donates the proceeds to one or more charities registered in Canada.

Upside was co-founded by Rob Antoniades, general partner of Information Venture Partners; Mark Skapinker, managing partner at Brightspark Ventures; and consultant Janice Goldstein, who currently volunteers her time as the organization’s executive director.

Drawing on the experience of similar organizations, such as Silicon Valley’s Entrepreneurs Foundation and Israel’s Tmura, the trio envisioned a made-in-Canada model that would tap the desire of hard-driving, ambitious entrepreneurs to give back to their communities.

“Time and money are two things high-growth companies don’t have,” Antoniades told PE Hub Canada. “But every startup has upside.”

During its two years of operation, Upside has collected pledges from about 40 companies. Not all of them are disclosed, but they include a high proportion of IT startups. The foundation’s first pledge came from Ben Zifkin, founder and CEO of Hubba, a product sharing network that very recently raised $11 million in a Series A financing.

Antoniades believes businesses of all types have many reasons for charitable giving. One of them is workplace culture and the ability of employers to recruit and retain employees who want their organizations to be socially responsible. Upside facilitates this by encouraging companies to pick the beneficiaries of their pledges.

The foundation came up with an additional incentive. This week it is hosting a meet-and-greet at the MaRS Discovery District in Toronto that features an all-star lineup of Canadian venture professionals. For entrepreneurs, the event is a rare opportunity to access various investors and market leaders in one spot.

“It’s the single greatest concentration of Canadian venture capitalists at a public event,” Antoniades said. At the time of publication, conference registrants totaled more than 600, which greatly exceeds Upside’s expectations.

Upside has already seen a payoff from its efforts. One of its earliest pledgers, Understoodit, an education technology startup founded by Liam Kaufman, was sold to EventMobi in 2013. A portion of the deal’s proceeds went to two Toronto-based charities: East York Learning Experience, a literacy program, and MJKO, a youth mentoring organization.

Antoniades hopes to see a growing stream of donations from comparable exits in the near future. In the meantime, Upside is focused on collecting more pledges and spreading its philanthropic message to the VC and startup communities.

There’s also a plan in the works to engage private equity firms and bring an entirely new source of charitable giving into the mix.