Benefit Corporations Raising Venture Capital

B Lab is a nonprofit that helped pass benefit corporation laws in over 30 states. They released a report about venture capital raised by public benefit corporations.

Many venture capitalists, VC firms, and other investors, like pension funds, have historically had doubts. They wondered if high-risk, mission-driven for-profit companies can fit into traditional venture capital investment deals. But the data shows benefit corporations have successfully entered the ecosystem, with venture capital firms backing them—and not just emerging funds, but top-tier venture funds as well.

Case Studies of Venture Funding

The B Lab report highlights several high-growth UK company and U.S. tech startup examples that have effectively raised venture capital:

• Alter Eco (fair trade food products): $3.05M
• AltSchool (education): $133M
• Cotopaxi (outdoor gear and apparel): $9.5M
• Ello (social network): $10.94M
• Farmigo (farm-to-table): $26M
• Yerdle (online resale marketplace): $5.5M

Notable investors in these portfolio companies include Andreessen Horowitz, Benchmark, Greycroft Partners, NEA, Baseline Ventures, and Omidyar Network.

What Is a Benefit Corporation?

A benefit corporation (also called a public benefit corporation in states like Delaware) is a for-profit legal entity that must consider social and environmental goals alongside shareholder return, as defined in its articles of incorporation. Unlike traditional corporations, directors must balance profit with positive impact, and they’re held accountable via mechanisms like annual benefit reports and third-party standards.

For comparison of annual benefit report requirements across states like Delaware and California, see Benefit Corporation Reporting Requirements. Those reports, filed after your fiscal year, must publicly show progress toward creating a “material positive impact on society and the environment.”

Can Benefit Corporations Raise VC Funding?

Absolutely—and it’s happening more than you might think.

Venture capital firms and venture capitalist teams typically conduct due diligence before investing in a portfolio company. Historically, investors viewed benefit corporations as too risky, mission-first, and potentially restrictive in maximizing short-term returns. Updated corporate law tools, like benefit provisions in governance documents, help solve these issues. They allow high-risk, high-growth startups to attract traditional VC funding.

Moreover, venture funds backed by pension funds or other institutional capital often require a familiar, Delaware corporation structure and transparent governance—benefit corporations can meet both criteria.

Why It Matters

• Long-term vs. short-term focus: Benefit corporations lock in mission-driven purpose—protecting founders and investors against pressure to favor short-term profits over long-term societal impact.
• Governance clarity: Having mission baked into articles of incorporation (or certificates of incorporation) and enforced via benefit reports reassures venture capitalists and VC firms conducting due diligence.
• Investor metrics: Venture funds and VC firms benefit from transparent third-party metrics on social impact, enabling measurable returns on both profit and purpose.

Final Takeaway

Benefit corporations are no longer fringe mission-driven companies—they’re a recognized corporate law structure compatible with raising venture capital, attracting venture funds, and satisfying pension fund governance requirements. 

If you’re a founder, investor, or early-stage team weighing the pros and cons of a public benefit corporation—or already operating as one and planning a venture capital raise—we can help. At SPZ Legal, we work with high-growth startups, mission-driven founders, and venture funds to design corporate structures that support long-term value and positive impact on society.

From certificates of incorporation and governance documents to due diligence support and equity incentive planning, our team brings deep experience in aligning purpose with growth.

Reach out to our team to schedule a conversation and see if a benefit corporation is the right fit for your next chapter.