Etsy: B Corporation with a mission to nurture and empower local economies

A Case Study in Financing Hybrid Enterprises

Excerpted from The Democracy Collaborative report, Strategies for Financing the Inclusive Economyoriginally published September 2016. (Photo: c/o Charles & Hudson, Creative Commons licensing)

The work Etsy is doing in generating income and part-time employment for low-income women is one of the modern economy’s phenomenal success stories. This online handicrafts marketplace enables craftspeople and artists from all walks of life to sell their crafts on its platform. Some 24 million shoppers come each year to purchase handicrafts from 1.6 million sellers, and 86 percent of those sellers are women, whereas only 30 percent of vendors nationally are women-owned. These Etsy sellers also have lower household income on average than the general population, which means the income generated can be a boon for cash-strapped households. Close to one in three sellers consider Etsy sales a business or their sole occupation; 44 percent use Etsy sales to cover household expenses; and 25 percent use the sales for savings.

How Etsy finances itself is an equally compelling story. Etsy, which in 2012 became a certified B Corporation, in its early stages raised capital from Union Square Ventures (USV). This venture capital firm has invested in other pathbreaking companies such as Twitter, Tumblr, and Meetup—as well as socially responsible firms like La Ruche (which connects farmers with buyers) and CrowdRise (which facilitates crowdfunding for charitable giving). USV also invested in Kickstarter, which recently reincorporated as a benefit corporation under Delaware law.

In March 2015, the Brooklyn-based Etsy became the largest—and one of the few—certified B Corporation to sell shares in an initial public offering, raising $267 million. To expand investment opportunities for Etsy vendors and other non-institutional investors, Etsy set aside 5 percent of shares for retail investors, and it limited investments to $2,500.

Etsy is well known for its social mission, including commitments to environmental sustainability, to providing a supportive work environment for its 685 employees, and to promoting women-owned businesses. Etsy’s mission is to foster a “world in which small businesses have significant sway in shaping the economy, local living economies are thriving everywhere, and people value authorship and provenance as much as price and convenience.

Join our webinar October 20th from 3:00pm-4:30pm ET to learn more about strategies on financing the inclusive economy.

Click here to register for the free webinar.