Loomio Points

Because Loomio is a cooperative, owned equally by its members, we don't have sweat equity in the same way as some other startups.

Instead, we have a separate system to acknowledge the work people did for free to get the project off the ground, and the opportunity cost staff wear by accepting pay below market rates while we get the business going. We acknowledge the risk workers took giving their time to an early stage startup with no guarantees by putting a multiplier on points earned during the early days.

People keep their Loomio Points even if they leave the co-op, and they are totally separate to ownership or investment shares. Someday, when the business is thriving, we look forward to paying them out.

Here's a more technical description of Loomio points, developed under professional legal/financial advice.

The “Loomio Points” (LPs) system is designed to be a clear mechanism in place to enable the Board to consider and fairly set a possible future discretionary bonus for contributors to Loomio’s development based on the overall performance of Loomio Cooperative Limited. LPs are accrued based on the time a person contributes to Loomio. When Loomio Cooperative Limited is determined by the Board to be in a secure financial position, the Board may, at its absolute discretion, resolve to make payments of cash bonuses to contributors that hold LPs.

Principles

  1. Loomio shareholders wish to value all effort contributed to Loomio, even while Loomio is in startup phase and not in a position to provide direct monetary reward.
  2. The Loomio Points (LPs) system will provide a clear mechanism for the Board to value this effort at a future point when Loomio is financially sustainable and payment will not threaten the viability of the company.
  3. LPs will be treated as a discretionary bonus that is based on company performance
  4. The Board may, at its absolute discretion, determine when Loomio Cooperative is in a position to pay out LPs, and how the valuation of LP’s will be calculated at that time.
  5. The Board, at its absolute discretion, may then resolve to make payments of cash bonuses to contributors that hold LPs.
  6. Distribution of any bonuses will be proportional to the number of points that have been accrued.
  7. A risk multiplier will be applied to LPs accrued by the co-founding shareholders of the Loomio cooperative in the earliest phase to recognise the increased level of risk taken. The rationale is that the risk involved reduces as Loomio develops over time.
  8. A discount multiplier of 0.6 will be applied to LPs accrued by shareholders and contributors who were being paid wages when the points were being accrued from Feb 2012 to present, and to points accrued from now on. The rationale for the discount multiplier is to acknowledge the reduced risk taken by shareholders and contributors who received cash remuneration for their work.
  9. From time to time the Board will review the discount ratio for paid contributors/shareholders, so that adjustments can be made in response to changes in pay rates as Loomio develops.