Cotopaxi Raises $3M for Do-Good Outdoor Company
July 22nd, 2014/The Wall Street Journal – Serial entrepreneur Davis Smith donates as much as 20% of revenue from his unprofitable three-month-old startup to charity.
Venture investors, who see the popularity of Toms Shoes Inc., eyeglasses company Warby Parker Inc., baby company The Honest Company Inc. and others as validation for baking corporate goodness into a brand, love the idea.
Mr. Smith’s outdoor apparel and gear company, Global Uprising pbc, has just raised $3 million from Forerunner Ventures, New Enterprise Associates, Lerer Ventures and a string of private investors, Venture Capital Dispatch has learned.
“It’s core to the company. It’s why I founded it,” said Mr. Smith of the public benefit corporation that does business as Cotopaxi. “We are a for-profit business, but it’s about a lot more than that.”
Mr. Smith previously founded Baby.com.br and Dinda.com.br in Brazil and has lived a signficant portion of his life in portions of Latin America where he saw extreme poverty. In founding Cotopaxi, he decided to do something to help in a meaningful, accountable way.
He hired a small team of designers late last year, many of whom previously worked at the likes of Nike, Columbia Sportwear and Marmot Mountain, to help him launch an outdoor e-commerce company that ties a portion of every sale to a cause.
With the $20 purchase of a 20-ounce stainless steel water bottle decorated with designs native to Bangladesh, Cotopaxi donates enough money so someone in Bangladesh can have six months of clean water. Purchasing an $89 Cusco backpack allows one child in Cusco, Peru, to receive an on-site tutor for a week.
Although Cotopaxi just launched in April, Mr. Smith said that so far customers are responding well.
With 12 employees, the Cottonwood Heights, Utah-based startup staged a “questival” wherein they challenged people to do a series of tasks, from milking an animal and hiking a mountain to volunteering at a soup kitchen in a 24-hour period. About 1,500 people registered and received a Cotopaxi backpack and a list of 200 such challenges. Then they took pictures of themselves wearing the backpack and completing the tasks. When they shared them on social media they got credit.
Within 24 hours the event yielded 30,000 social media posts that reached one million followers. Mr. Smith said about 5,000 people showed up at the party to celebrate the end of the event, hundreds of them wearing homemade T-shirts and hats with the Cotopaxi logo.
“I was really surprised,” said Mr. Smith. The team added T-shirts and hats to the company site and plans to send outerwear in a few months, he said.
Along with being a strong marketing event for the startup, the questival was also profitable in its own right.
Mr. Smith said Cotopaxi plans to do another such event in San Francisco this October and as many as 20 nationwide during the next 12 months.
As a public benefit corporation, Cotopaxi has stated in its articles of incorporation that it aims to have a measurable impact on people and the planet every year.
Mr. Smith said even though attorneys warned him he may have difficulty raising venture capital if he first registered as a public benefit corporation – instead of changing the legal status after the fact – he chose to ignore the advice.
“Investors loved the idea,” he said.
By Lizette Chapman