How Funding Works
Subvert is a cooperative, but the cooperative needs capital to build and operate the platform. We raise that capital through the Corporation, Subvert Inc. PBC, in a way that does not affect cooperative governance.
This page walks through how that works.
The four-step funding process
Step 1 (Completed). The Co-op creates the Corporation. Before any outside investment, Subvert Cooperative LCA created Subvert Inc. PBC.
The Corporation is a holding company that owns the platform's intellectual property: the brand, the code, the trademarks. The Co-op holds 100% of the Corporation's founding shares (common stock). The Corporation has no employees. The Co-op licenses the IP back from the Corporation and operates the platform.
Step 2 (Completed). The Corporation raised early investment using a SAFE. A SAFE (Simple Agreement for Future Equity) is a promise of future shares, not shares themselves. An investor provides capital today and receives the right to convert that investment into equity at a future funding round, at a pre-agreed maximum valuation cap. No shares are issued at this stage. The Co-op still owns 100% of the Corporation's common stock. Governance is unchanged.
Step 3 (Planned). The Corporation raises a priced round, and SAFEs convert. When the Corporation raises a priced round, it issues a new class of stock: non-voting Investor Shares. This is the moment when earlier SAFEs convert into shares. SAFE holders convert at their original valuation cap, which is typically a better price than new investors get, in exchange for investing earlier and taking more risk. New investors come in at the new valuation. All investors receive non-voting shares with identical terms.
What this means for Co-op Members. A priced round slightly dilutes the Co-op's share of profits/ economic upside but does not touch governance. Members still elect the board. Members, through the co-op, still own 100% of the Corporation's common shares. Members still control all operational decisions. When the cooperative is profitable, the majority of surplus flows back to members as patronage refunds. A smaller share flows to investors through the Corporation, in proportion to the shares they hold.
Where Subvert is now
Subvert has raised a SAFE round to date. Those SAFEs have not yet converted into shares. Our investors hold a contractual right to receive non-voting shares when a priced round happens. Until then, the Co-op holds 100% of the Corporation's common stock.