Fred Wilson points out the language of the act may prevent VC-backed startups from accessing the funds, because they are “affiliated” with organizations such that the total size of the affiliation is >500 employees: https://avc.com/2020/03/startups-and-sba-loans/
(This is because taking VC investment “affiliates” the startup with every other org the VC has funded.)
Has anyone looked into whether there might be an analogous concern for nonprofits who receive donations from foundations that have a lot of grantees, e.g. Open Phil?
Ought’s accountants (who’ve taken a close look at the CARES Act) confirmed that the “affiliation test” is determined by ownership, so it shouldn’t be an issue for nonprofits so long as the org isn’t owned by its donors.
Cool! I think the grant framework is different than a typical investor engagement that a VC arranges. If you read our Open Phil contracts you can see we are not partners.
Yeah, I’d be pretty surprised if any reputable foundations were taking ownership stake when they make grants. (Because that’d be an investment, not a donation.)
Fred Wilson points out the language of the act may prevent VC-backed startups from accessing the funds, because they are “affiliated” with organizations such that the total size of the affiliation is >500 employees: https://avc.com/2020/03/startups-and-sba-loans/
(This is because taking VC investment “affiliates” the startup with every other org the VC has funded.)
Has anyone looked into whether there might be an analogous concern for nonprofits who receive donations from foundations that have a lot of grantees, e.g. Open Phil?
We’re looking into this and will get back to you. Let me know if you find anything.
Ought’s accountants (who’ve taken a close look at the CARES Act) confirmed that the “affiliation test” is determined by ownership, so it shouldn’t be an issue for nonprofits so long as the org isn’t owned by its donors.
Cool! I think the grant framework is different than a typical investor engagement that a VC arranges. If you read our Open Phil contracts you can see we are not partners.
Yeah, I’d be pretty surprised if any reputable foundations were taking ownership stake when they make grants. (Because that’d be an investment, not a donation.)
This discussion of which VC-backed startups are ineligible makes me think most nonprofits will be eligible: https://intro.indie.vc/vcbacked-companies
Not definitive though.
Per Axios reporting the “ban” on VC-backed startups may change .