Patagonia, the clothing company that is equal parts high-end outdoor apparel retailer and environmental advocate, has made a practice of giving one percent of its profits to nonprofit grass-roots environmental organizations. Now it’s looking to boost its profits by investing in for-profit sustainable businesses. On Monday the company launched $20 Million and Change, an in-house venture that will invest in startup businesses involved with food, water, energy or waste.
“We believe in our company’s long-term vision around the environment and areas we want to make change in,” Rose Marcario, chief executive officer of the company’s newly created holding company Patagonia Works, told The Daily Beast. “We know there are great entrepreneurs out there with really great ideas and resources and they could be the next Patagonia.”
Likely candidates will, in essence, be those Patagonia can see itself in. Marcario, who previously served as chief financial officer of the company, suggests small businesses that are utilizing practices that least harm the environment or those that promote alternative energy. “We want to invest in an eco startup and company with the same values around the environment as us,” Marcario said.
The company plans to invest an initial $20 million into early-stage small businesses. Investments will range in size from $500,000 to $5 million depending on the capital needed and the business’s ultimate goal. The only requirement for companies interested in being considered is they must already have $1 million in revenue or capitalization.
The fund is an outgrowth of the vision of founder Yvon Chouinard,the rock climber turned entrepreneur who has built Patagonia into a 29-store chain that boasts annual sales of more than $400 million “Patagonia, the company, has doubled in size and we have generated additional capital and Yvon and I have talked about what we can do with that cash to have influence over protecting the environment,” said Marcario. “Yvon wants to use that money to create greater change in the world. He’s not doing what some companies do, who hoard their cash or pay huge dividends.”
Started 40 years ago, Patagonia was an alpine climbing hardware company known for its efforts to redesign pitons—or metal spikes—to minimize harm to mountains. Today it’s better known for its organic cotton pullovers and animal-friendly fleece zipper jackets and has grown to be one of the most successful outdoor retailers, tripling its profits since 2008 and experiencing its best sales year to date last year.
Patagonia’s prices are often higher than similar retailers, because of the company’s earth-friendly production standards. But Marcario says Patagonia’s success is a testament to its viable business model. “If you look at the last 10 years, with what happened to Wall Street and the whole crash of the economic structure, and greed for greed’s sake, what we are trying to prove is that Patagonia’s way of doing business is good business, it’s a profitable business,” she said.
Patagonia already invests money directly into the environment. It gives one percent of all its profits to grass roots environmental organizations and last year began investing in sustainable food practices through a unit called Patagonia Provisions. Provisions produces wild salmon jerky that’s sold for $12.50 a pack. The salmon are caught in-river in British Columbia and processed in accordance with conservation NGOs.
Marcario says the principle of “$20 Million and Change” is to pass on the Patagonia legacy to businesses that she believes have the biggest potential to be movement leaders. “I do think business is an untapped well for change,” she said “The change in a revolution is not likely to come from science or politics or even social action to a degree, because business has much more influence over people’s day to day lives.”
Marcario says Patagonia has already received multiple applications from startups looking for funding, most of which she confides are focused on innovations in apparel.