Colorado Invents the A-Corp (Elon, Pay No Heed)

Godspeed: good fortune; success (used as a wish to a person starting on a journey, a new venture, etc.)

It had to be coming.

In the world of corporate governance, there’s a C Corp, and, as readers of this newsletter most certainly know, there’s a B Corp.

We’re now jumping to the head of the alphabet to complete the trifecta with the “A-Corp,” as in Artist Corp.

(A-B-C.  Sorry to leave you out, S Corps – no disrespect.)

That’s because the State of Colorado just created the “Artist Company,” a new legal structure for creators.

To qualify for this legal structure, a company must have a stated artistic mission and be majority artist-owned.

The problem this addresses is a creators seeking growth capital and then potentially losing control of their company and, thus, their artistic creations.

The A-Corp's innovation is to uncouple economic rights from governance.  So, an investor will have right as far as revenue and royalties, for instance – but not control over the artistic intellectual property, which remains with the artist members of the A-Corp.

Another of this law’s intents is to make capital investment from foundations, impact investors, and mission-aligned investors easier to acquire for artists looking to grow their businesses through mission- and project-related investments (MRIs and PRIs, respectively).

I think the new corporate structure offers critical safeguards to artist creators, though it's a reach to believe it will speed investments from the above groups, who – from my experience – are risk-averse and more likely to make grants, or even loans, rather than equity investments. Especially foundations.

While this law was born in Colorado, any artist company anywhere – from Utah to Uzbekistan – can form an A-Corp in Colorado.

And yes, there is a variant of this that allows you to create a Public Benefit A-Corp.

This is another example of legal creativity and innovation that’s part of a larger movement toward recognizing businesses outside the spectrum of typical shareholder capitalism.  More, please!

If you’d like to dig in deeper, Jason Weiner, a Boulder-based attorney, does a great job of presenting the new legal structure here.

Thanks to sharp-eyed reader Kelsey Jae for alerting me to this development.  Kelsey Jae’s both a friend and colleague here in Boise who runs a boutique B Corp legal firm, Law for Conscious Leadership, that supports social enterprise and cooperative culture with a compassionate focus on small businesses, non-profits, and relationships.​

Godspeed, friends.

Russ

P.S. I’m hoping Elon Musk doesn’t get inspired by the A-Corp and the growing alphabet corporate soup to create an “X Corp.” I can only imagine what that governance structure would look like – perhaps a better corporate structure for him and his ilk would be the A-hole.

🤔 Think About It

"I hope we shall crush in its birth the aristocracy of our monied corporations which dare already to challenge our government to a trial by strength, and bid defiance to the laws of our country." Thomas Jefferson

💥 Quick Hits

• Creative coalition – Now that creators have their own corporate structure (A-corp, see above), why not their own Coalition on AI?
• Human agency is not productivity – A great piece by Baratunde Thurston of Life With Machines, a public interest media project. Thurston argues that tech has co-opted "agency" and slathered it to mean productivity, when in fact it should be defined as the power to set the conditions of one's own experience. Shared with us by the good people of Project Liberty.
• How's your blood pressure these days? – Yes, it's summertime, so in case you were hoovered up by the holiday and missed this, here's followup reporting by Andrew Ross Sorkin on the C-word of Corruption and Trump's billion(s) dollar gain.
• Today's lesson in irony – AI companies are reportedly asking the Federal Government to crack down on Chinese open-source AI companies because, according to the AI companies, the Chinese models are being illicitly trained on the AI companies' models.

WHICH LEADS ME TO ASK: What then about the legality of Anthropic and other AI companies training their LMLs on OUR content?

It's easy as one, two, three – or simple as Do-Re-Mi

In honor of our lead story about A-B-C corps, I bring you the first time this "record" was played on the air, at least according to Dick Clark of American Bandstand (remember that?).