The role of the board has expanded significantly from the 1970’s traditionally less engaged oversight model where directors provided “rubber stamping” of management recommendations. A modern board must be a competitive asset and an accelerant for the business.
Directors must not only perform oversight, but they must add a perspective that helps move the company forward.
As a new director, you may be wondering how you can quickly come up the learning curve so you can begin contributing and adding value.
Increasingly corporations are being asked to comment on social and political issues. This raises a host of questions that the company needs to purposefully think about.
There are many constituencies who are asking a company’s CEO and leadership teams to comment on a wide array of issues.
Employees, customers, and investors may or may not want insight on a company’s philosophy and stance on high visibility issues.
The social concept of a corporation really came to the forefront with the death of George Floyd as well as subsequent major issues. This triggered deep focus on DEI and forced companies to focus and ask themselves if they really understood the black American experience.
Another recent issue has been the war in Ukraine, companies were expected to take a stance by employees and other stakeholders and publicly state whether they would continue to do business with Russia.
Another hot button topic corporations have had to contend with is Roe v. Wade.
Boards have to ask themselves what the upside of opening Pandora’s box of political division by commenting on highly charged social /political issues is?
It is more important than ever to take the time to have a deep internal discussion with the CEO, leadership team and boards to create a framework and policy on when and if the company will comment. This allows for a thoughtful approach without the emotion of feeling like you must respond the moment there is a big issue in the news cycle.
When considering whether to comment on a particular topic, ask yourself:
– Is this core to your business?
– Which constituencies are most activated / impacted by this issue?
– Is this an issue that pertains to company policy, employees, customers, investors, or some material aspect of the business? Or is it an issue of personal politics?
– How divisive/polarizing is the issue?
– Is it mandatory or optional to comment?
Companies such as AmazonAMZN -1.4%, Yelp, JPMorgan, Dell have responded to Roe V. Wade by quickly expanding healthcare benefits for employees. Some companies are upgrading insurance plans to cover contraceptives and allowed for Flexible Spending Accounts to pay for reproductive health procedures.
Interestingly, according to the Conference Board, only about 10% of companies have taken a public position on this issue whereas about 51% of companies surveyed made an internal announcement. Companies need to think carefully about which issue requires an external public announcement vs an internal statement to employees.
Consider, is there more upside vs downside if your company were to comment on an issue? Create a balanced view of your different constituencies: customers, employees, investors.
Certainly, since the Business Roundtable 2018 landmark statement by the largest fortune 500 companies that they were moving from shareholder centricity to stakeholder centricity, the role of the corporation has been evolving.
However, may be wise to remember that pioneers often get the arrows in the back. Being a fast follower may be an alternative strategy to being out front. You must be mindful about what is appropriate for your company’s brand when considering whether to make a public or internal statement.
Silicon Valley companies who are often well-known names and are always in the news cycle are uniformly highly communicative on taking positions on social issues as they are deeply focused on their employee cohort who is highly energized around social issues…but keep in mind that the mandatory need to give a response for a Silicon Valley company may or may not be an appropriate reaction for your company.
There really is no clear absolute right answer but having the discussion before there is a hot button issue that arises and clarifying the parameters for when and if the company will comment in any way is important.
One of the most difficult things in this highly engaging discussion is to separate your own personal politics, preferences, and passions, from what should be a corporate policy.
When in doubt, go back to your company’s initial statement of values and remind yourself of the mission, vision, and purpose of your company.
Betsy Atkins, board member for Wynn Las Vegas and Volvo Car Group, explores prominent risks for corporate boards.
Cybersecurity is a major risk area right now for public company boards. Perhaps it’s time to look at increasing the budget for cyber and adding external services to augment internal company monitoring capabilities. Also think about rotating regular boutique cyber penetration testing to mitigate risk. Another major challenge is attracting, engaging and retaining talent in a hybrid work environment.
One of the best ways to think about company risk preparation is to have a meeting dedicated to reviewing what management identifies as their top ten risks. For example, if you were a restaurant company, your risks might include tainted food supply/food poisoning, loss of consumer credit card information, a mass shooter onsite, etc. Go through the top ten risks and ask management what their plan is for each. One of the best exercises is to ask the CEO and company spokesperson to go through social media and video practice sessions, actually recording and practicing responses to risks. Identify your social media resources, along with traditional crises management consultants.
A less obvious but really impactful risk (especially longer-term) is the threat of new, more innovative startup interlopers. Nobody wants to wake up and find our they’re Blockbuster or Borders. Purposefully request an outside-in look at new competitive entrants and what different business models or go-to-market channels are emerging. For example, although it may not be obvious now, how are you thinking about web 3.0 or the metaverse and how this could possibly affect your business directly or in some adjacent way? What if the CEO is unexpectedly ill or has a personal crisis, or there are negative events surrounding your CEO and the CEO needs to be rapidly replaced? Who is the successor? How ready is your successor?
The nature of CEO communication on social topics over the last two years has significantly changed. The event of George Floyds death and emerging movement of Black Lives Matter was a major catalyst for change following on the heels of the business roundtables 2018 shift from shareholder to stakeholder capitalism.
The embrace of the definition of stakeholders and the ESG movement with special focus on diversity equity and inclusion was particularly catalyzed by George Floyd.
We see the recent Ukraine war triggering another public round of companies taking positions on whether they will do business with Russia.
All of these events have brought up the question of just how much should corporations join in on social-political discourse?
On the other side of the argument in favor of companies opining publicly on social issues we see Coinbase COIN -11.3% CEO Brian Armstrong telling his employees that the companies intranet is not the vehicle for political debate, that they should please do that elsewhere i.e. Facebook, Twitter, etc. and focus their energy while working on the corporate goals, of course, in alignment with the companies values and principals.
Boards need to ask themselves, when it comes to taking stand on social/political issues, where is the line for their CEO?
For example, the recent press on Disney who first faced backlash for not taking a public stance on Florida legislation which would ban schools from teaching students in third grade and below about sexual orientation and then faced more criticism for their response to the backlash and the proposed legislation. Perhaps the situation could have been handled with more diplomacy taking into account the various positionings of the multitude of their stakeholders; when making a public statement you cannot just reply to one constituency i.e. only the employees or only the customer base.
Netflix NFLX -1.8% has recently made headlines after sending a memo to staffers highlighting how Netflix values the “artistic expression” of its content creators over each employee’s personal beliefs / lifestyle. Netflix states that they produce a variety of stories even if some of the content created may be in opposition to their own personal values. “Depending on your role, you may need to work on titles you perceive to be harmful,” the memo stated. “If you’d find it hard to support our content breadth, Netflix may not be the best place for you.”
Boards along with management may want to go through the exercise of thinking through the best course of action when a social issue comes up. Perhaps run through this list of questions as a starting point:
1. Do we need to say anything? Often when you say something on a controversial topic you will cause offense or polarization with one set of constituencies. Rarely do you get criticized for being quiet (there are exceptions).
2. Who are you speaking to? Your employees’, customers, investors? And why do they need to hear from you on this? If you are an oil and gas company your consumers employees and investors do want to hear your position on climate change, but they may not need to hear your position on other topics.
3. Another question to ask yourself is: “who are your current and future target customers and employees?” If you are a consumer brand especially your current and future customer cohort may be the born crypto born digital millennial gen z cohort where your views on social issues are expected and the norm and they may not engage with your brand if you are not taking a position.
There are also anomalies that you may want to consider when thinking this topic through since there are always tradeoffs when it comes to publicly commenting on any social / political topic.
We often see many glitzy Silicon Valley tech companies commenting frequently on these topics but keep in mind that Silicon Valley is a unique bubble in America and may not be the example your company should be following.
There really is no clear absolute right answer, but having the discussion and clarifying the parameters is important.
Additionally, there are cycles in communication in PR to be sensitive to.
One of the most difficult things in this highly engaging discussion is to separate your own personal politics, preferences, and passions, from what should be a corporate policy.
One of the best foundational starting points that I have seen is to go back to your company’s first principal of what are your values. Re-affirm and reclarify what is your company’s purpose and mission.
Based on these foundational building blocks then look at layering on what is the right framework for your CEO to speak on highly sensitive social issues.
The dawn of corporate governance goes back to the 1930s when US corporations first began selling stocks to a wider set of owners.
We have seen many changes in corporate governance over the decades.
There are 4 major eras of corporate governance.
This first era of corporate governance 1.0 has been characterized a less engaged oversight model that was perceived by many as remote, distant, “rubber stamping” of managements recommendations and sometimes with a “crony” board.
In the 1970s institutional investing driven by pension funds and the creation of big institutional investors was the beginning of so-called “fiduciary capitalism”.
Governance 2.0 was post Enron / WorldCom debacle highlighting governance that did not have deep enough understanding of management activities and lacked important financial control. The result was Sarbanes Oxley Act and increased regulations.
The advent of the reforms post Enron have two important features that are the catalyst for deeper board engagement: The exec session where directors (unsupervised by management) could discuss areas of opportunity, concerns, etc. The exec session led to the now best practice of an annual strategy offsite where directors are exposed to in depth strategy and planning of managements near and long-term plans.
Governance 3.0 was catalyzed by the Business Roundtable statement released 2018 where the largest global multi nationals articulated the need to shift from shareholder centric to stakeholder centric model where ESG becomes an imperative. ESG principals are seen as foundational to a company’s success with all stakeholders. ESG is the umbrella over a company’s vision, mission, and purpose. Companies are understanding the critical importance of ESG on their brand enabling companies to attract employees / customers and investors. Many US companies are playing catch up putting in place ESG frameworks to be accountable to stakeholders.
Covid accelerated the digital transformation of companies as people work virtually in a hybrid environment, social unrest is punctuated by George Floyds death catapults diversity, inclusion, equity into sharp focus.
Millennial and gen z workers make up 50% of workforce and prioritize work life wellness and balance. The importance of safety, data privacy, connection to community become an area of great focus.
Almost two years of work-from-home triggers the “great resignation” where as much as 20% of the workforce in certain industries such as technology resign and change jobs. Connectivity to the company’s culture is strained by the distances on the company’s social network.
Simultaneously the biggest institutional investors are prioritizing ESG reporting especially around environmental and climate measures.
Now we are at the dawn of Corporate Governance 4. 0 which is about future proofing and tech enabling our companies, so they stay relevant and competitive. Most boards do not yet recognize this.
Governance 4.0’s purpose is to immunize stakeholders against the company losing momentum, relevancy, and growth.
In this new model of corporate governance 4.0 directors need to be a competitive asset and an accelerant for the business, adding a perspective that not only performs oversight but helps move the co. forward. The biggest risk for corporations is that the co. becomes stale in its product or service offering and its business model for engaging with its customers.
Legacy companies experience low growth; the key challenge for companies staying competitive and relevant is operationalizing their data to drive insights and outcomes. The knowledge of true tech enablement and digital transformation using AI, ML, deep learning analytics and big data is one of the key next gen board competencies in Governance 4.0.
The adoption of ESG and stakeholder governance in 3.0 are now table stakes. The future challenge for boards is to continue to lean in to help companies be innovative, entrepreneurial for the future.
The velocity of change is exponential. The last two years of covid lockdown are commonly accepted a having accelerated digital transformation by 5 years.
We now expect businesses to interact with the same ease of our cellphone apps in all aspects of business. We expect a consumerization of how data and offerings are served up to us.
The companies that forward invests in AI / ML deep learning and leverage their data lake to drive rapid time to insights and actions is the company that will thrive and grow.
Here is an example of how a traditional legacy business applied their data to the challenging problem of getting their frontline $16 an hour workers to get vaccinated.
This food packing company was stubbornly stuck at only 37% of frontline works vaccinated. They offered the workers a one-time bonus of a thousand dollars. This did increase vaccination rate by 30% but they were still stuck at 67% vaccination rate. The company then used traditional AI / ML algorithms to crawl the web, used the meta data about their employee’s normal behavior pattern to find insights. They identified that their frontline workers stopped for coffee and a donut on the way in for work, and also bought a lotto ticket. By offering a $10k company sponsored lotto and giving a ticket to vaccinated employees, they increased the vaccination rate to over 90%.
Consumer companies around the world know how to analyze the personas of their customers and hit just the right “hot button” to hook their interests. Now businesses have the same opportunity to understand employees as much as their customers by applying this same technology to have better insight throughout all company functions – HR, marketing, manufacturing, supply chain, etc. This tech enabling will create a competitive differentiator yielding precision data for decision making.
Using technology to engage with your employees, many of whom are in a hybrid work model, can help build loyalty and intimacy if you curate innovative tailored career pathing to build engagement. I.e. companies could create their own Netflix content syllabus and offer certifications. It’s widely known that gen 0 and millennials value career planning more than they do near term compensation. Companies need to use tech tools in all parts of the business.
In this current era of corporate governance 4.0 it is all about future proofing your company. The velocity of change can be measured in the precipitous drop in a corporation’s life cycle. Today 50% of companies are no longer independent after ten years. Duration on the S&P 500 has dropped below 7 years. CEO tenure is around 4.5 years. The reason companies disappear is the exponential rate of change. Companies are not reinviting their business model, their go to market strategy, or embedding AI / ML and tech into each functional area. Companies thought digital transformation meant having a website that worked a little better and perhaps automating part of the back office. That is not the case. Companies need to forward invest in upskilling and augmenting their workforce. Companies need to understand how to adapt and embed all forms of hyper automation into both the front and back office, customer journey, customer experience, all the way through shipping. Most importantly, companies must harvest and make actionable all their data.
Companies’ competitive relevance quickly erodes unless companies are truly tech enabled in every aspect of their business. Boards are responding by repurposing nominating governance committee to also include ESG. Companies are also creating new ESG / tech committees.
The boards’ role has shifted from governance 1.0 which was a remote distance oversight board, to governance 2.0 which brought compliance and reform to the boardroom post Enron, to governance 3.0 which is marked by the shift from shareholder to stakeholder capitalism and ESG centric mindset to, to present day governance 4.0 where the companies long term competitiveness is completely interwoven with tech enabling every business function.
The boards role as a fiduciary for all stakeholders is to future proof the company. Boards must check if management is properly assessing the risk of the velocity of change. Does leadership see the new interlopers who may blindside their established business model?
When we look back 5 years from now, governance 4.0, the era of Future Proofing, will seem the obvious thing we should have embraced sooner!
Every year there is a shift in corporate governance standards, in an effort to evolve along with the rapidly changing business landscape and stay aligned with the shifting priorities of all stakeholders.
I encourage boards to kick off 2022 by evaluating these corporate governance topics:
These hot button topics will continue to shape the way board’s function and evolve in 2022. Boards must prepare to evaluate and potentially reshape their approach as the boardroom continues to modernize.
This is the first time in history when significant changes in US taxation are intertwined with a global tax reform effort.
The interconnection of national and international tax restructuring results in a very complex environment that creates a lot of uncertainty for businesses everywhere.
There is currently a global moment in proposed tax reform; the G7 is encouraging 140 countries to complete a project led by the OECD (The Organization for Economic Co-operation and Development) and G20 to overhaul tax laws impacting multi-national businesses.
In tandem with its participation in these global tax reform efforts, the Biden administration in the US is also working to enact new tax legislation.
140 nations are working together on two ideas that have been named Pillar One and Pillar Two.
Pillar One: The goal of Pillar One is to address the concerns of nations such as France and the UK where the very largest size (in dollars) companies have a significant number of customers.
The proposed plan currently applies to companies with revenue over $24B / €20B and states that if a company’s profit reaches 10% threshold, the nations where the customers are located are able to tax between 20% – 30% of the profits above the 10% level. This set of requirements results in only about 100 companies being impacted, a large share of which are likely to be US companies.
It is important to note that companies in sectors such as extraction (oil, gas, etc.) and financial services are exempt from the proposed policy.
Pillar Two: This is the most widely known initiative. This states that countries that have multinational companies’ headquarters could levy a minimum tax of 15% to “top up” the tax imposed in the nations where the company operates to ensure that profits wherever earned are subject to at least 15% tax. The purpose of this minimum global tax of 15% is to reduce tax competition among countries and limit the potential for companies to reduce their taxes by funneling profits or moving headquarters to low-tax jurisdictions.
In Summary: Pillar 1 looks at global profit and reassigns which country has taxing rights (which of course, inversely means if one country is gaining the ability to tax, another country is giving up that ability). This is a very globally involved undertaking and it will require a significant degree of coordination amongst tax authorities and result in multi-lateral tax disputes to manage. Pillar 2 gives countries the authority to impose additional tax above the local tax where the local tax is below the agreed minimum tax rate.
Most companies worry about Pillar 2, some focus on Pillar 1, a few very large companies must think deeply about both.
One of the biggest questions for board directors to understand is who is the regulatory entity is that is “in charge” of administering and enforcing the minimum tax that is being proposed? Should board members be asking management what international jurisdictions will be affected by this proposed minimum tax for 2022 and beyond?
There is no singular overarching global tax enforcing agency; it will be up to each individual country to implement and enforce the measures they agree to. Countries would need to enact new laws, repeal previous tax policies that conflict with new rules and would have to work with many other countries to resolve potential disputes.
While there are 140 countries participating in the OECD/G20 discussions, this does not automatically translate into every country being fully on board and swiftly enacting these laws. Participation as well as implementation is voluntary and there will likely be different rates and degrees of buy in making it all the more difficult for companies as they enter their tax planning cycles.
In conjunction with proposed OECD global tax reform, the US is currently in the midst of a national tax reform effort under the Biden administration.
The Jobs Act in 2017 established our current tax rate of 21%. Biden has proposed raising the current corporate rate to 28%. Biden has also proposed a 21% tax rate on foreign earnings of US companies which, when coupled with foreign tax credit limitation and expense allocation rules could result in a tax rate of over 26% on foreign earnings (much higher than the OECD proposed 15% global tax minimum).
It would seem that the US Tax proposals and discussions are moving faster and farther than the OECD global tax proposals and could potentially leave US businesses in a disadvantaged position if they will be subjected to increased taxes long before other countries enact similar tax policies that level the playing field.
However, it is important to note that while the Biden administration has released a tax policy proposal, moving any tax increases through Congress will be challenging and will require the use of the reconciliation process that allows legislation to pass with just a majority vote in the Senate.
Corporate boards have a duty of loyalty to their stakeholders to make financial decisions in the best interest of their stakeholders. The proposed US national tax policy changes coupled with international tax policy discussions may be an important strategic topic for the annual planning cycle for 2022 and beyond.
Board members both for US companies as well as international multinational companies may want to consider adding these topics to future board room discussions:
– Ask for a briefing on your current global tax status.
– Ask for a briefing on how the proposed Biden tax changes currently being considered in Congress will affect the company.
– Ask for a review of any future capital investment proposal and which jurisdiction is the optimal geography.
– Review and consider the tax implications of future international M&A targets.
– One way to handle gathering insights and recommendations for the board could be to set up an interim committee on a tax strategy and finance. This committee could lead with a special focus so this complex topic can be analyzed and reviewed beginning with the 4th quarter planning cycle.
The US and other international tax authorities have various mechanisms for helping companies getting tax certainty by reaching agreement up front. Perhaps boards may want to ask management for an update on their use of these mechanisms currently and their plans for future use.
It may be possible to secure advanced certainty that lasts for several years in the US, as well as bilaterally, with another country’s tax authority. This process is frequently used on transfer pricing. While this process can be time-consuming, it can be a cost savings option in the long run.
A key consideration is your corporation’s global competitiveness. Tax increases will require boards to examine where to cut capital spending. Typically, companies don’t cut dividends; R&D, new facilities, equipment and factories are often cut which impacts global competitiveness.
This is a critical window of time before the US tax bill is passed for boards to ask for a tax briefing and scenario modeling from management. Boards need to ask for a tax briefing and scenario planning and how management is thinking about models. There will be significantly less corporate profit available to reinvest in the company in the future if these large corporate tax increases are approved. For example, boards and management need to understand how the company will stay competitive if their R&D budget potentially takes a hit to accommodate for a larger tax bill.
The board would be well served to immerse itself in tax this season as this is a complex topic with far reaching impact; it is well worth allocating extra time and resources on all fronts for a thorough and robust planning.
Fast-growing startups are often building the plane while flying it, but the most successful ones are those that are genuinely focused on delivering value to all of their key stakeholders. Too often, we’ve seen founders consumed by the wrong things – ones that might be rewarding in the near-term, but are insignificant and potentially detrimental for long-term sustainable success. This might be a “growth at all costs” mentality, for example. We’ve all seen it and we know how those stories end.
As an entrepreneur and former CEO of three different companies, I know first-hand that one of the most critical factors in building and leading a successful business is having world-class corporate governance.
Corporate governance is the framework that allows a company to thrive by balancing and addressing the vested interests of various stakeholders including shareholders, employees and customers. Additionally, strong corporate governance practices foster a company culture built on high standards of integrity, accountability, transparency, fairness, and responsibility. Having this critical foundational layer in place early on provides the necessary flexibility for management to fully focus on innovation and delivering a better product or service to its customers.
So how can companies ensure that strong corporate governance practices are in place? Most importantly, they should assemble a board with directors who possess robust and varied skill sets and experience that is well matched to the organization’s stage and growth plans. While most boards have a sitting or former CEO, incorporating board members with deep domain expertise should also be a key priority. As a best practice, companies should look for at least one or two members who have experience with related industries and customers. It is also extremely beneficial to bring outside perspectives to the board, often achieved by naming independent directors with no material stake or interest in the company.
One company that has shown a true commitment to building a strong corporate governance structure is Gopuff, which is one of many reasons as to why I recently joined its board of directors. Their commitment to corporate governance – along with fiscal responsibility – is inextricably linked to their continued success and rapid growth. All this, combined with their mission, leadership, ability to execute against strategic priorities, and proven business model, was what made Gopuff truly stand out to me as a leader in the market with tremendous potential.
Gopuff is a fast-growing business that created and is leading a new category of instant needs. The instant needs category goes beyond delivery or convenience, delighting the customer by combining incredible speed with a wide selection of everyday essentials. As Gopuff shapes the future of instant needs via its unique, vertically integrated operating model, favorable unit economics, hyper-local delivery and affordability, I am proud to be joining their board as the company continues on this exciting journey.
For prospective board directors, it’s important to vet the right businesses and opportunities that compliment your skill set and enable you to support a company’s strategic objectives. I have deep experience in integrating technology to accelerate the business and the customer journey and to reduce costs and increase efficiency in the supply chain.
These experiences will be valuable and part of what I will strive to bring to the Gopuff boardroom as I embark on this new mission with co-founders CEOs Yakir Gola and Rafael Ilishayev. They have a strong commitment to sustainable growth and are seeking to build a critical, foundational layer of corporate governance that will ensure a healthy and vibrant enterprise. Gopuff is a great example of a startup that’s prioritizing corporate governance, which is why I’m proud to have a seat at the table.
It’s that time of year again…Proxy Season! If your company is registered with the SEC you are likely very busy preparing and reviewing proxy statements required for the annual meeting so your shareholders can vote on all the matters presented to them.
As you plan for your 2021 Proxy Season, I share my checklist of trends and key topics your shareholders (and all stakeholders) will be interested in:
· Be ready to report on the ethnic, racial and gender diversity of your board composition and target minimum 30% diverse.
· Articulate your companies ESG program – pick a framework and disclose your plans.
· Plan to proactively meet and have live engagement with your top ten shareholders.
· Articulate your plans to strengthen tech readiness and cyber risk mitigation.
· Review 2021 policy’s and address 2021 regulatory landscape changes.
· Create a plan for deeper employee engagement in a distributed virtual environment.
· Turnover is at a very high rate – have a plan for how you will keep your best employees.
· Be sure your CEO is social media trained and ready to respond on current events.
· Make 2021 the year your company gets out in front and focuses on Gen Zero as a robust future employee and customer base.
As you go through your proxy readiness process, be sure to keep these top trends in mind as they will be the topics shareholders will be most interested in.
Special Purpose Acquisition Company (SPAC) IPOs have generated a lot of buzz recently, and for good reason: 242 SPACs were launched in 2020 alone. SPACs aren’t anything new; they’ve been around since at least the 90s. You may even remember that Burger King was reintroduced to the public markets via SPAC merger way back in 2012.
So why the sudden explosion of interest? How could a relatively arcane financial instrument vault to the forefront of the public imagination and account for nearly half of all money raised via public offerings in 2020? As it turns out, there are quite a few reasons, but the real paradigm-shifting variable that refocused and revolutionized the SPAC landscape boils down to a single word: quality.
Ultimately, venture-backed businesses are expected to generate real returns for their investors by way of a liquidity event. Before the SPAC boom, this was most often achieved via acquisition, a private equity buyout, or an IPO.
In the mid-2010s, a new cohort of tech companies who had cut their teeth disrupting industries (or creating their own) had reached the stage in their corporate lifecycles where a traditional IPO became feasible. But management teams who spent their professional careers tearing down the status quo sought alternative approaches, such as direct listings.
This precipitated a broader awakening; suddenly, our eyes were opened to a more diverse set of pathways to liquidity. High caliber, venture-backed companies that would never have previously considered it began exploring SPAC mergers. A new generation of SPACs emerged to reap this newly fertile ground.
As a vehicle for liquidity, a SPAC merger is an attractive alternative to an IPO. Management teams receive the capital they need to fully fund their business plans at valuations that give credit for anticipated growth, without subjecting themselves to the complexities of an IPO process. Because SPAC managers and investors account for future performance, companies that may have been 6-18 months away from IPO readiness have begun to explore SPAC mergers as an alternative to late stage financing rounds.
We’ve also begun to see companies that had planned to IPO, or have even begun the process, pause to examine the relative benefits and efficiencies of a SPAC, where teams have more visibility and control over their valuation and investor base. Whatever the motivation, SPAC mergers provides them with the capital necessary to focus on what they do best: execute.
While the universe of potential targets has evolved, the structure of most SPACs hasn’t. Management teams and boards remain mostly homogenous, and sponsors are typically investment funds that are unable to bring value beyond capital to a target.
Queen’s Gambit Growth Capital is a fundamentally different kind of SPAC, founded on the principles of diversity and partnership. Our 100% female-led management team and board are seasoned senior executives, thought leaders and operators; our sponsor, Agility Logistics, is committed both to providing commercial opportunities and to lending its operational resources to our target.
Our investable universe spans Healthcare, Fintech, Frontier Technologies and Logistics with a particular focus on broad ESG themes. The ideal target will have already retired its technical risk, have a clear pathway to profitability, be prepared to immediately capitalize on a significant capital injection to stimulate explosive growth and have a public markets ready, stellar management team. This last point is especially crucial as we are looking to partner with a driven, aligned and ambitious existing group. We will measure our success by ensuring that a resilient, sustainable public enterprise is created as a result of partnering with Queen’s Gambit.
By leveraging our diverse view and far-reaching network as an asset and accelerant, our target company can expect the Queen’s Gambit board and advisers to facilitate revenue generating partnerships and provide access to blue chip, high-quality long-term capital. As experienced business leaders with decades of cumulative experience as public company directors, our shareholders and our target company can have confidence in our ability to perform thorough diligence of the target company’s past financial performance, strategic thinking competencies, risk management capabilities, as well as in our commitment to establish sound audit, compensation and governance oversight.
We believe that our value proposition is as appealing as it is differentiated. We couldn’t be more excited to engage with today’s most promising companies.
P.S. Our name is in keeping with our CEO’s history of naming her funds after chess moves and is a statement of our mandate for diversity. Any allusion to a certain Netflix show should be considered purely coincidental.
About the authors:
Victoria Grace is the CEO of Queen’s Gambit Growth Capital and founding partner of Colle Capital Partners LP, an opportunistic early stage technology venture fund. She previously served as Partner at Wall Street Technology Partners LP and Director of the Dresdner Kleinwort Wasserstein Private Equity Group. She co-founded Work It, Mom! and co-managed the company for five years until its merger. Victoria serves on the board of Vostok New Ventures, an investment company with presence in Sweden.
Betsy Atkins is a member of the Queen’s Gambit Advisory Board and the CEO / Owner of Baja Corporation. She is a globally recognized corporate governance thought leader having served on over 34 public boards and currently serving on the board of Volvo Cars, Wynn Resorts, and is the Chair of the Google Cloud Advisory Board.