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German Tech Unicorn Personio Creates $66 Million Charity Fund

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Munich-based HR startup Personio has joined a growing number of startups like Twilio, Atlassian and Canva that have pledged to donate 1% of the company’s equity to charity. That stake is currently worth $63 million after the company that supplies people management tools for small European businesses raised a $270 million round at a $6.3 billion valuation in October.

Personio’s cofounders and investors have also donated $3 million in cash to enable the foundation to start supporting charities tackling climate change and education inequality immediately rather than waiting for the company’s IPO. Personio cofounder and CEO Hanno Renner says the foundation aimed to support NGOs with “venture philanthropy” grants, and training and mentoring via an accelerator. 

“We said if Personio was to be successful we wanted to make sure it was ingrained in our DNA that the company would fulfil its responsibility towards society,” says Renner. “The Covid-19 crisis has significantly increased educational inequality around the world and we are the last generation that can change the course of climate change. Personio Foundation will help to drive change in these vital areas that require immediate action and are close to the hearts of employees and founders.”

Renner says that the philanthropist Chuck Feeney, who donated almost his entire multi-billion dollar fortune from founding retail giant Duty Free Shopping to charity in his lifetime, was the inspiration for him and his cofounders in setting up the foundation. “He was called the billionaire who wasn’t and what really inspired me is that there many people just signing pledges but in his lifetime he took his entire fortune and gave it away to have an impact,” says Renner. 

The move tracks with the goals of the 1% Pledge campaign, which was launched in 2014 with the backing of Salesforce, Atlassian and Tide. The campaign asked founders to donate 1% of personal equity, or 1% of company equity, or time, or profit to charitable causes. The pledge has built traction in the United States and Australia but Crunchbase data suggests Personio would join education publisher Pearson and accounting software firm Sage as the European and British companies with the largest valuation to make a similar commitment.

Unusually the Personio’s 1% equity commitment is non-dilutive and any new investors who join later rounds will also need to contribute. “So all our new investors have to live with slightly lower returns on their investments given that part of their returns will flow into the foundations and everyone has to sign on to that,” says Renner. “Initially this caused some confusion with many investors seeing this clause for the first time, especially their lawyers, because it reduces their economic upside but it was nice to see over time they saw why it was an important part of our culture.”

The Personio Foundation is also unusual in that it had been seeded with not just $1 million from the cofounders, $1 million from the company but also $1 million from the pockets of the startups VC backers. That in part reflects the growing power of entrepreneurs at successful European startups to dictate terms to investors looking to join crowded investment rounds. “We didn’t force them into it was more peer pressuring them by putting our money on the table,” says Renner. “Initially there was a little pushback but then again in the current funding position they want to be part of the right company.” 

The four cofounders of Personio have also signed the Founders Pledge, which binds entrepreneurs to donate a “meaningful percentage” of their equity to charity after the sale, or listing of a business. The company like Salesforce and other software companies also offers its HR software at discount to NGOs.

Read the Forbes’ profile of Chuck Feeney: The Billionaire Who Wanted To Die Broke...Is Now Officially Broke

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