The Candor Clause
By Colin McIntosh, CEO and hopefully an ally
If you've been following S&G, you know that we recently sold out for a ton of cash.
Sorry, that joke might upset some investors – we raised a seed round of $1.3 million to fuel faster growth, hire more people (hi Sarah and Carl!), and catch up to the insane demand we're seeing for our sheets. To our valued investors, no need to be worried; I'm totally carrying out my fiduciary responsibility (good luck catching me on my yacht in the Mediterranean).
As we were raising this money, I brought up something specific in the term sheet to each of our investors: S&G would be including the Candor Clause in our documents, which requires disclosure of any past complaints of harassment levied against them. The Candor Clause was created by Liz Giorgi and Hayley Anderson, co-founders of soona; more on them in a sec!
Here's the exact text –
Sexual Harassment; Discrimination. Except as has been disclosed by the Purchaser to the Company in writing, if the Purchaser is an individual, then to the knowledge of the Purchaser, there is not nor has there ever been any written or verbal complaint made against the Purchaser alleging actions of discrimination or sexual harassment (a “Discrimination or Harassment Complaint”). Except as has been disclosed by the Purchaser to the Company in writing, if the Purchaser is other than an individual, then to the knowledge of the Purchaser, there is not nor has there ever been any written or verbal Discrimination or Harassment Complaint made against any of the directors, officers, principals or managers of the Purchaser or of any venture capital firm or private equity firm that is the general partner of or otherwise manages the Purchaser.
Why is this necessary? To quote Liz and Hayley, "Only 2% of companies backed by venture capital this year will be female founded. Inherently, this creates a power vacuum. When abused, it puts female founders at a disadvantage. Far too many female founders, including our own, have personal experiences with sexual harassment, assault and discrimination."
In other words, investors tend to treat female founders fundamentally differently than male founders, often to the detriment of the company, and frequently in dangerous, unlawful ways. Even investors themselves acknowledge this.
I want to give a shout-out to the awesome founders of soona that came up with this clause and who included it in their $1.2M fundraise earlier this year. (If you haven't heard of soona, they're how we shoot much of our visual content – think Kinko's for same-day branded professional photo and video.)
S&G is proud to officially be the first male-founded company to include it in our fundraising documents, and I'd encourage other male founders to follow suit.
When Liz (co-founder & CEO of soona) first told me about her plans for the Candor Clause while we were both going through Techstars, it immediately resonated with me. Prior to focusing on sustainability at S&G, I spent years of my life at Revolar, a wearable tech startup, trying to fight sexual assault and violence with tech. I witnessed harassment of our co-founders (Jacqueline and Andrea) firsthand by different investors we met with, and the difference in how I'm treated as a founder and CEO is very apparent.
Even though I personally haven't experienced this type of harassment, I asked Liz if S&G could include this clause in all of our future fundraising efforts (she said please do). My reasoning is that if only female founders add this to their docs, by definition that means only ~2% of venture deals will be subject to it. Male founders and CEOs need to start incorporating this disclosure requirement in order to create a wider blanket of accountability over the entire tech and venture ecosystem.
To learn all about the Candor Clause straight from the founders of soona, please just head here; thanks to Liz and Hayley for providing such a great blueprint. I would encourage any founder or CEO to add it into the contractual language for their next fundraise, and hopefully if enough of us do, we can actually start to weed out bad actors in the tech / venture community.
Thank you. This is amazing and just in case I wasn’t already happy with this company, the customer service, and the product(s), this pushed it over the top for me. For any company to include this Candor Clause, is awesome but the fact that you preemptively included this clause and then took the time to explain why this was important to S&G, makes me even happier to continue to show support here. I appreciate the forethought that went into this and how important this is to S&G. Thank you again!
Tanisha H on