Post-COVID Trends Drive Allbirds to $1.7 Billion Valuation, Pandemic-Driven Startups are Worthy of QSBS Consideration

Allbirds QSBS

Allbirds is a popular footwear company which manufactures shoes out of sustainable, natural products like merino wool and eucalyptus trees. The child of a New Zealand native, Tim Brown, and renewables expert, Joey Zwillinger, the company puts “sustainability” front and center in all of their campaigns. 

According to Allbirds, the use of polyester—which makes up 55% of clothing—creates 700 million tons of carbon annually that are released into the earth’s atmosphere. In reaction, the iconic footwear manufacturer has translated their earth-friendly production methods into the highly competitive activewear industry.

The collection of naturally-sourced leggings, bike shorts, tanks, and tees is launched in anticipation of the company’s pending IPO. This expansion places the company in the same category as Nike, Lululemon, and Under Armour which is rapidly growing as clothing companies conform to the everyday activewear trends.

COVID 19 Has Changed the Way Americans Work

As a result of the COVID 19 pandemic and the huge shift to the “work-from-home” lifestyle, the term “athleisure” has boomed as individuals strive to combine the comforts of home with the formality of work. The reality of long-term or even permanent remote work has set in for many working Americans who work for corporations that are cutting loose their office space all together.

Tim Brown of Allbirds shares that they designed the collection for much more than just exercise and that he expects customers of the brand to adopt the clothing line as day-to-day wear. 

The Importance of Impact

Allbirds has not veered from its commitment to environmental protection and has committed to cutting its carbon-footprint in half over the next 4 years. Their $1.7 billion valuation paired with their path to IPO later this year confirms an increased public interest in corporations that are considerate of sustainable growth and environmental impact.

Bird told CNBC that the majority of apparel that is manufactured for running is made of synthetic materials that are created from barrels of oil. 

“For us at Allbirds, the disconnect between what we wear to improve our personal health and its negative impact on the health of our planet seemed like an important space for us to tackle.”

It is important for investors to be aware of these types of trends, but even more so for investors who seek to benefit from the highly lucrative Qualified Small Business Stock incentives outlined in Section 1202. With start-ups like Allbirds was in their earlier career, the 100% federal tax exemption also carries inherent risk to the investor as there are gross asset thresholds—50 million—that the qualified business must not surpass. 

Small C-Corporations that are modeling their success after large companies like Allbirds are a good place to start for someone looking to exclude up to $10 million in capital gains from their federal taxes. 
Visit QSBSExpert to learn more about the types of businesses that qualify for Section 1202.

This article does not constitute legal or tax advice. Please consult with your legal or tax advisor with respect to your particular circumstance.

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