Gold Coast-based equity management platform Cake Equity has joined tech behemoths like DocuSign, Salesforce, Slack, Atlassian and Canva to Pledge 1% - a movement that sees companies donate 1 per cent of shares to philanthropic organisations.
The movement, co-founded by Australian software giant Atlassian, has so far seen members donate more than half a billion dollars ($USD) to deserving causes.
For Cake co-founder and CEO Jason Atkins, the decision to join Pledge 1% was an easy one, considering the entire business is about helping companies manage their equity, including by streamlining and automating the setup and management of employee share option plans (ESOP) and capital raises.
The company, currently part of Startmate's Summer21 accelerator program, implemented its equity pledge through its own platform by creating a 'Pledge 1% Option Plan'.
"The Pledge 1% initiative really aligns with our mission at Cake. We want to empower start-ups to use their equity to create a better world, and the Pledge 1% mission is so great at championing that," says Atkins.
"We're so glad to be working with Pledge 1% to help accelerate this movement in Australia. We really envisage the 1% equity pledge becoming a standard addition to any start-up cap table, just like an ESOP.
"While it's true that exits are not guaranteed for a start-up, the value created by the Pledge initiative over in the US proves that the potential benefits for those in need here in Australia could be huge. We really see the value in encouraging all start-ups to participate."
The initiative has an option pool, of which up to 1 per cent of the fully diluted capital in the company can be allocated to eligible charities and philanthropic organisations.
The recipients will be able to share in the success of the company as it grows in value, and they can benefit from any exit event, just like any employee option holders.
The company can make option grants to charities during the life of the company or grant the entire 1 per cent at the time of an exit event.
Cake in-house counsel Charlie Ross described the Pledge 1% Option Plan model as a no-brainer for the group.
"For us, the option pool method just made sense," Ross said.
"Our platform has helped countless start-ups to implement an ESOP where they otherwise thought it would be too hard. So we've applied that same simplified process so founders can make the Pledge in just a few clicks, and still make sure it's done properly and with full transparency to all stakeholders."
Atkins has encouraged other businesses to follow in the footsteps of Cake and Atlassian to Pledge 1%.
"We really encourage all companies, large and small, to participate in the Pledge 1% movement," Atkins said.
"It is a simple step now, that really can change lives in the future."Never miss a news update, subscribe here. Follow us on LinkedIn, Instagram and Twitter.
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