Techno-Innov is a worker’s cooperative (SCOP) or cooperative company. In French business legislation, this is a type a of commercial company with added democratic features that will be outlined in this article.
Financing a SCOP
The question of financing has been frequently asked about Techno-Innov.
The company has been created as a SCOP SARL. This choice has a number of advantages and a few constraints, though not everybody agrees on which is which.
Here are some more details.
Here are the statutes of the Techno Innoc SCOP SARL (PDF – French). It’s quite arduous reading though, so here are the bullet points.
The basic principles of a cooperative company are quite simple: putting people first, democracy, solidarity and sharing. These principle translate into the simple equation :
One person = one vote
However, only associates have a vote and not all associates are employees. The cooperative statute imposes a few rules, among others, that there can’t be more than a third of non-employee associates (except for cooperative companies), non-employee associates can’t hold more than 49% of stock and no associate can hold more than 50% of stock.
Leaders are elected
All the leaders of a SCOP are elected by the assembled associates and any associate can apply (with a few restrictions). Leaders or managers are appointed by the assembled associates to handle daily affairs but major decisions require a vote.
Value is in people, not stock
A cooperative company gets its value from its associates and employees, not from its stock. The stock shares value is fixed. This means you can’t profit from reselling stock shares. Stock can vary but only according to the number of social shares bought by associates according to the rules outlined in the statutes.
The principles we describe guarantee that employees keep control of their company and their job, but they can be seen as a hindrance by some investors whose goal is to quickly increase their capital, even at the expense of other people and the company. There are however some ways that allow a cooperative company to raise funds.
Current account credits by associates
This allows an associate, employee or not, to loan money to the company. It’s much easier to get than a bank loan and usually much less restrictive. One or more associate needs to have funds to loan to the cooperative however.
Participative securities allow the cooperative company to raise funds from people who aren’t part of the company but wish to contribute to its development. Participative securities may, at first glance, look like stock without voting privileges. Indeed, owners of participative securities cannot interfere with the SCOP’s functioning. Participative securities are remunerated according to a formula set down when they are created and includes a fixed part and a variable one, indexed on the company’s growth and results. Securities can be given up or bought back by the cooperative company (after at least 7 years) at their face value. Unlike stock, Participative securities value never changes. If the scop failed, the participative securities would be lost.
What’s it like in practice?
Techno-Innov’s development investments (components purchase, prototypes, outsourcing…) are currently financed by our family and friends, using the mechanisms exposed above.
For expenses incurred before setting up Techno-Innov, some of the funds where provided by CPE in the context of a partnership with the electronics lab (see incubation part of the “difficult beginnings” article in the blog section), but all the equipment purchased that way remains property of the lab. The rest of the funds comes from ED3L, which is another one of our companies.
As for the time we have and are still spending on the project, there isn’t any financing for it and it is our own way of investing in the project (and quite a sizeable one!).