Sourcery today announced its Partner Stock Option Subscription Programme that will be available to all its Sourcery Partners, allowing the sector itself to take ownership and lead the future of trade as a global alliance committed to transforming trade for good. From now on, all Partners, including Grower, Manufacturer, Trade and Brand Partners, can participate in this programme as members by purchasing stock through their annual membership contributions.
With this bold move, Sourcery introduces a unique fundraising model as a supply-chain-owned and for-profit corporation that serves the sector in much the same way as traditional multi-stakeholder initiatives but doesn’t have to compete for the same limited philanthropic capital pools or operate under an overly complex governance structure that can impede innovation, speed to market and scale potential. Further, this comes at a time when efforts by many innovative start-ups for next-gen materials, circularity systems, digital identification and traceability technologies with huge market potential have failed to find a clear product-market fit or have struggled to secure adequate financing from traditional venture capitalists whose growth and profitability expectations are not suited for fibre and textiles industry where steady and sustained growth is needed to make meaningful and profitable businesses over time.
“During the first three years of Sourcery, we took no outside investment and were profitable because we had had no other choice. When it came time to raise growth capital, we knew the type of capital we needed to transform trade for good and it was clear that neither philanthropy nor traditional venture capital was suited for our organisation”, says Crispin Argento, Global Managing Director of Sourcery.
Sourcery knows the future of sustainable cotton and trade requires the industry itself to fund, own and proactively lead the transformation, which means depending less on others whose short-term financial interest or interest to preserve the status quo would undermine Sourcery’s mission and our Partners success to transform trade for good.
“We are not here to disrupt anything”, says Argento. “The fibre and textile industry is doing that to itself. We are here to ‘transform’ everything so that this industry has a future. For us, that means ensuring cotton has a future that is more transparent, fair, efficient and delivers tangible commercial, social and environmental outcomes.”
After seeking guidance from several early Grower, Manufacturer and Brand Partners and securing pre-seed investment last year, Sourcery began to look inward toward its current Partners to fund the transformation of trade for good, rather than seek funding from outside the sector for our next phase of growth.
Early this year, Sourcery formed Sourcery Group, Inc. and developed an innovative two-tiered governance structure that gives its Partners (also its investors) equal interest and votes and therefore a shared voice in the decision-making process and future direction of the organisation. Starting today, Sourcery is setting aside as much as 60% of all outstanding shares through its Partner Stock Option Subscription Programme for its Partners to invest through their membership contributions in Class B Common Stock shares as well as invite any Partner to invest additionally in Class A Preferred shares.
Later, Sourcery intends to raise additional growth capital through the US Securities and Exchange Commission Regulation A+ (Tier 1), which allows for off-market private fundraising through the sale of stock securities to limited groups of pre-qualified investors. This will allow our Partners who wish to sell their shares and profit from their investment in Sourcery directly while also profiting through their businesses because they have adopted the Direct-to-GrowerTM approach to trade.
“We have been looking for a traceability solution that actually works for our business and truly puts the interests of farmers, suppliers, and brands first. As a future owner of Sourcery through this programme, Baba Spinners along with other Partners can take the lead in defining and owning the future of trade, sustainable impact and traceability—creating more value and profitability for our business rather than assuming more risk and cost that comes with most other solutions”, says Yash Agarwal, Executive Director of Baba Spinners Limited, a new Provisional Manufacturer Partner in Sourcery.
The Stock Option Subscription Programme structure itself is also unique in that no single Partner can earn more stock than another Partner as stock distribution is based on the aggregate value of the equal member contributions (membership fees) invested in Sourcery over a five (5) year vesting period. Stock options can only be exercised after maintaining membership and meeting other performance targets during that time—in other words, earning stock requires collaboration and commitment to Sourcery and other Partners through proactive trade with other Direct-to-GrowerTM Partners.
Partners who wish to invest additional capital can do so through a traditional stock offering. However, share allocation and controlling interests of any one Partner are limited to five per cent (5%) of all outstanding equity ensuring that the Partner investor pool is diverse and that Sourcery can maintain its unique position as a commercially neutral trade intermediary and facilitator between all Partners.
“Whether a Brand or a Grower (farmer), Manufacturer or Trader, all Partners hold equal weight in the decision-making process of the organisation and no single shareholder can put their interests and leverage their influence over another—this way everyone benefits from grower to consumer,” says Argento. “When your customers are your investors, it creates an entirely new dynamic for accountability and ensures that promises made are delivered.”
