As we follow stock market trends this year that have included booms in EdTech, foreign intervention, and record setting weeks for IPOs, another popular trend is less about industry or profit, and more about mission.
We reported last month, how Allbirds $1.7 billion valuation prepared them for their IPO alongside their clothing-line launch even despite reporting losses in 2020. Allbirds originated as a shoe manufacturer whose mission is front in center in all campaigns and focuses on environmental sustainability.
Upcoming IPOs with Impact
Rent the Runway, Inc. is a clothing company seeking to boost sustainability in the highly-wasteful fashion industry. They rent high-end clothing, giving it a second-life at an affordable price and keeping these items out of landfills while participating in the sharing economy and creating jobs. They officially filed for their IPO following their $750 million valuation.
Another mission-driven company who recently filed for IPO is Chobani, maker of greek yogurt, oat milk, dairy- and plant-based creamers and probiotic beverages. Their platform contrasts the increase in fast-food and obesity by making nutritious foods more accessible to larger numbers of people in order to make the world a healthier place. Choboni could be valued at more than $10 billion in its IPO.
Warby Parker, founded “to inspire and impact the world with vision, purpose, and style” has raised $120 million in its recent round of funding bringing its valuation to $3 billion. Their campaign enlightens consumers that 2.5 billion people world-side cannot access the glasses they need which impacts their learning and working capabilities. In response, for every pair of glasses sold, Warby Parker distributes a pair to someone in need.
What Does This Mean for QSBS?
Investors and founders alike are seeking ways to forge paths and take risks in the highly saturated US economy. Even-more, investors are pivoting their investment strategy to take advantage of the 100% tax exemption on the capital gains of Qualified Small Business Stock.
A certain level of risk accompanies this somewhat unbelievable reward in that only domestic C-Corps with less than $50 million in gross assets are eligible to issue Qualified Small Business Stock. Founders and initial investors can see what trends are propelling businesses, like Allbirds and Warby Parker, onto the public market despite the economic downturn due to the pandemic in order to set themselves up for ultimate success.
See what other requirements Section 1202 outlines for companies who issue Qualified Small Business Stock.
This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.