If the open social web is going to grow and thrive, people need to be able to build new platforms and services sustainably. But that’s not what the email I was reading was telling me.
The message in my inbox captured a persistent and problematic idea in open tech circles. It reminded me of one I’d received years earlier, back when I was building my first platform.
“You should be doing this for the love of it.”
The author, a well-known blogger, was outraged that I was trying to make money from Elgg, the open source social networking platform I co-founded. Its users included Ivy League universities, Fortune 500 companies, international NGOs, and even governments at the national level, but how dare I make enough money from it to pay for rent and groceries?
Now, deep into building my second open source social platform, the same sentiment had returned. Different person, same message:
“You shouldn’t try to make revenue. We need to abolish money.”
With no hint of irony, I was being criticized for failing to establish a Star Trek post-financial utopia. Meanwhile, I was building new web software, which meant infrastructure, teammates, and bills to pay. And to do anything at all, I needed a place to live and a way to meet my basic needs. To be clear, I’m all for imagining ways out of our current economic system. But asking individual underfunded founders to operate outside it isn’t a viable strategy. These systemic changes are far outside the scope of a software platform or an underfunded founder.
I wasn’t independently wealthy. I didn’t have a trust fund. I just wanted to build something good. How could anyone like me, with experience but without a financial safety net, possibly win? And if that’s hard for me, imagine how much harder it is for builders from underrepresented or vulnerable communities, with even less access to capital.
Supporting builders to create a strong ecosystem
Even people with experience and a track record from those communities struggle to get funded. Recreating that inequality on the social web would be a disaster. Social media is a huge part of how we learn about the world and make our democratic decisions. If those perspectives are excluded, the platforms shaping public discourse will reflect only the interests of those who already hold privilege and power. In effect, only privileged perspectives will shape how our platforms work, what voices get heard, and how people come to understand the world around them.
I believe in the promise of the open social web. It’s a pro-social alternative to existing social media platforms, which has the potential to support communities and discourse rather than strip-mine them for value. But if we want it to survive, let alone thrive, we need to:
Fund and support new pro-social platforms. Build models that support a broad, representative set of builders, including those from communities most impacted by today’s platforms. Support community ownership models to reduce the risk of platforms being used as instruments of political manipulation, as we've seen with X and Facebook.
In previous posts, I’ve discussed what I would do if I was running product at Bluesky, Mastodon, and my own platform. Those posts have focused on what sustainability looks like once a platform is up and running. But how do you get from an idea to a functioning platform and set it up for success?
Establishing a new open social web platform takes time, effort, and money to get right. So how do we fund that early stage in a way that’s sustainable, and aligned with the values of the ecosystem we want to build?
In this post, I’ll explore what I would do if I was funding open social web platforms. This is not designed to be universal advice. It’s what I would do if I was setting out to solve the problem. Others will bring different ideas to the table, and I hope they do. We need all of them. Together, maybe we can spark a bigger conversation about what it would take to make the open social web truly viable.
My experience
My thinking here comes from experience across multiple sides of this problem as a builder, investor, and long-time participant in the ecosystem. When I think about how we can fund the next generation of platforms, I’m drawing on five key experiences that span the full lifecycle, from hacking together early infrastructure to funding mission-driven teams at scale:
I’ve been a part of the open social web for decades. I’m a board member at
A New Social, a non-profit that aims to create a healthy ecosystem across protocols, have advised
the Social Web Foundation and
FediForum, have built my own platforms, and have owned my own single-user Mastodon instance for years. I know and respect folks working on Mastodon, Bluesky, Ghost, and many others, and think of myself as a friend to all of them. In 2004,
I co-founded Elgg, an open source social networking platform, in the UK. We
won awards and grew a strong open source ecosystem: one version of the platform was translated into 80 languages. I also co-founded a startup to offer consulting and support services for it, which we successfully bootstrapped for years before receiving direct investment. In 2014,
I co-founded Known, a startup that produced an open source social publishing platform, in San Francisco. It was a part of the third cohort at Matter, an accelerator for startups with the potential to change media for good. Our customers included KQED, the public media organization, which
won an award for its Known-powered site. Outside the startup, the software was used as part of the
indieweb. (It still powers
my site today.) We ultimately exited to
Medium, but the open source platform remains available and in use. In 2017, I
became the west coast Director of Investments at Matter, the accelerator that had founded Known. We tweaked the mission to support startups with the potential to create “a more informed, inclusive, and empathetic society”. I was involved in
directly investing in 24 startups and supporting a portfolio of 75. While I was there, I saw thousands of pitches from startups hoping to be funded, and got a strong sense of what makes a team succeed. I’ve been the first employee at two venture-backed startups that are still alive and growing, and part of the leadership team at others, including a non-profit that raised significant support through individual and institutional giving. Outside of my employment, I’ve given technology, product, and strategy advice to hundreds of startups and organizations.
Together, these experiences have shaped how I think about funding infrastructure that actually lasts, and who gets to build it.
A theory of change
How do we fund that early stage in a way that’s sustainable, and aligned with the values of the ecosystem we want to build?
That’s the question I’ve been sitting with. Most funders have a thesis (if they’re investors) or a theory of change (if they’re philanthropists) that informs how they allocate capital. Here’s mine:
Social media has failed us. Nowhere is this more visible than in Elon Musk’s acquisition of X, where a platform with 335 million monthly active users is manipulated specifically according to its owner’s point of view. It’s also true on Facebook, where gutting its fact-checking policy and changing its algorithm has led to a degraded experience for many people.
As a result, many people have reduced their engagement with incumbent social platforms. And with growing disillusionment around privacy, algorithmic manipulation, and platform control, that trend is unlikely to slow.
Notably, a significant subset is already exploring the open social web: a world of alternatives to traditional social media platforms that includes Bluesky and Mastodon, as well as a long tail of platforms that includes Farcaster, Nostr, and more. Each of these platforms is built on an open protocol that prevents them from falling under control by a single entity.
Because of their distinct architecture and reliance on open protocols, open social web platforms are more resilient to manipulation for political gain. They are more transparent and auditable, and either don’t have a single point of control or allow for a credible exit from a platform owner if they make decisions that are unpalatable to its users. Some of them have even made forays into community governance.
From a philanthropic standpoint, these platforms advance public discourse, media pluralism, and digital rights: some of the core pillars of healthy democracies. I believe providing alternatives to hard-right discourse is morally right. But they also represent a significant commercial opportunity. They have the potential to disrupt the entire incumbent social media landscape — a market worth over $250 billion. Even today, there is a serviceable available market of around $333 million, and growing quickly. (I’ve estimated these numbers using existing social media user and revenue per user figures.) These platforms are better for democracy, but because the potential market size is enormous while the current one is small but growing fast, they also represent a rare window for significant investment gains. This is already playing out: Farcaster raised $150M last year, while Bluesky has raised $36M and is growing rapidly.
I believe that teams who are focused on solving meaningful problems for real people rather than serving a rigid ideology, and who encompass technology, business, and design skills, are more likely to create platforms that find enough users who love them to become sustainable. These are teams with the willingness to pivot their platforms, sometimes multiple times, in order to make sure they’re building something people want. I want to back teams with this mindset and mix of skills who are building open social web platforms with the potential to unseat today’s incumbents.
Funding is infrastructure. Without it, the ecosystem crumbles. I see this as a rare moment to shape the foundations of a better internet, before the next wave of social infrastructure calcifies. But for people who are primarily motivated by returns, there’s also a solid reason to participate.
So what’s the best way to fund them?
Some common ways projects are funded
There are a few different funding vehicles available to me if I want to support the open social web. Let’s take some time to go through them in turn.
There’s no one-size-fits-all answer. Each funding model brings different trade-offs, and different possibilities for the kinds of builders, communities, and outcomes it can support. Here’s how I think about the options.
(If you’re familiar with funding models, you might want to skip this section. It’s up to you.)
Grants
What it is: Grants are money given by an organization for a specific purpose, which don’t need to be paid back and aren’t given in exchange for equity in a business. They’re made to further the grant-maker’s goals. If the grant-maker is a non-profit foundation, that might be a social mission; if it’s a software platform, it might be to encourage developers to adopt its APIs.
On the open social web, these might come from a few different sources. It might be a foundation that sees the impact current platforms have on the democratic process and wants to promote more democratic platforms. It might be a government that wants to promote alternatives to US-centric software hegemony. (See the United Nations open source principles, calls for the EU to promote technological autonomy, or initiatives like the Docs project.) Or it might be an already-funded vendor that wants more developers to use its protocol.
When it works well: Grants work best when a project’s goals align clearly with the funder’s mission, and when the builders are able to focus on delivering outcomes without the pressure of immediate monetization. They’re particularly valuable for early-stage infrastructure work, protocol development, accessibility improvements, and research-backed exploration that may not yet have a business model. Grants can help de-risk experimentation and support projects that serve the public good but aren’t obviously profitable. In many cases, grants have been the difference between an idea staying in someone’s head and a working prototype seeing daylight.
Risks and trade-offs: Grants come with strings (even if they’re not financial ones). Applying for them can take significant time and labor, and reporting requirements can be burdensome, especially for small teams. Funding cycles can be unpredictable, and priorities may shift with leadership changes or political winds. (At Matter, I discovered that an organization that was friendly under one leader became unresponsive after they handed the baton to someone else.)
Most importantly, grants rarely support the long-term maintenance of a platform. They’re great for getting something off the ground, but without a follow-on revenue model or sustained support, grant-funded projects risk becoming abandoned or fragile.
Examples in the open social web: Many open social web platforms have been funded by the NLNet Foundation, which supports organizations and people “who contribute to an open internet for all.” This includes multiple ActivityPub projects including Mastodon itself. The latter has also received grant funding from the European Commission, among others.
Donations
What it is: Donations are flexible gifts from individuals or organizations to support a cause. In contrast to grants, they aren’t necessarily associated with a specific project, and come with fewer strings. They’re most often given in smaller amounts (sometimes on a recurring basis) to non-profits, so that the donation can be written off of the giver’s taxes.
When it works well: Donations work best when a project has a clear mission that resonates with a broad audience, and when it can inspire sustained goodwill and trust. This is especially true when the project is visibly active, communicative with its supporters, and aligned with nonprofit values.
Recurring donation models, whether directly via a dedicated fundraising platform, via check or transfer, or on platforms like Patreon, OpenCollective, or GitHub Sponsors, can provide a lightweight income stream to help cover operational costs or ongoing maintenance. Donations can also be powerful in moments of visibility (like a major release, news event, or crisis) that mobilize supporter enthusiasm.
Risks and trade-offs: Donation income can be inconsistent and hard to predict, especially if it's reliant on public attention cycles or goodwill from a niche audience. It can also subtly shape a project’s public narrative, nudging teams toward emotional or symbolic gestures rather than behind-the-scenes infrastructure work that’s harder to explain to donors.
Unless the organization is a 501(c)(3) or similar nonprofit, larger donations may be limited by the donor’s ability to write them off. Typically, organizations that accept donations receive the majority from large foundations and very wealthy individuals, with a minority coming from regular people. It’s very hard to raise enough money to support an organization from small donations alone, and if you look closer at successful projects that appear to be grassroots-funded, you’ll often find that they’re surprisingly top-heavy. Independence means increasing the dependence on smaller donors, but it’s a steep hill to climb.
Finally, running donation campaigns and managing supporters’ expectations takes time. For small teams, that can compete with actually building the software.
Examples in the open social web: Mastodon has long accepted individual donations via Patreon and other platforms; Pixelfed follows a similar pattern.
Crowdfunding
What it is: Crowdfunding collects small donations from a large number of people in order to raise money for a specific project. Whereas regular donations might be recurring on an ongoing basis, crowdfunding contributions are one-offs. Typically, each person who donates receives something in return for their donation: the product itself at higher levels, or even direct access to the team, and cheaper gifts like stickers and T-shirts at lower levels.
When it works well: Crowdfunding works best when you have a clear, concrete offering, a deadline, and a story people can rally behind. It’s particularly effective for launching new products, features, or major upgrades, especially when there’s already an audience or community eager to support the work. Campaigns that feel urgent, personal, and exciting tend to perform better, especially when the creators are transparent and communicative.
Risks and trade-offs: Even if a campaign succeeds, crowdfunding can create a false sense of sustainability. A single successful campaign might cover an initial build, but it doesn’t provide a long-term revenue stream, unless it’s tied to a larger strategy. The overhead is also larger than you might expect: running a campaign well involves marketing, community management, and often customer support. (Many campaigns hire an outside marketing agency, which can eat 20% or more of the final budget.) And if expectations aren’t met, the backlash can be swift and public.
As with startups themselves, teams with design polish, storytelling chops, and access to online networks are more likely to succeed, perpetuating the same inequalities we’ve seen elsewhere. These are traits that don’t always correlate with technical merit or long-term resilience. As a result, important but unglamorous infrastructure projects may struggle to compete with flashier ideas.
Finally, here’s an open secret: successful crowdfunding campaigns often have a significant percentage of their funding committed ahead of time. That way the campaign looks like it’s more organically successful than it actually was, which in turn attracts more contributors. The trick is that this only works for people who have the networks to find those initial committed participants to begin with, ensuring that people with established wealth and connections are more likely to succeed here too.
Examples in the open social web: Micro.blog was originally funded with a crowdfunding campaign. It helps to have an existing following: Micro.blog succeeded in part because it already had an audience invested in Manton Reece’s blog and podcast work, as well as because it offered a clear product vision people could imagine using.
Venture investment
What it is: Venture capital invests in businesses with the potential to be high-growth. Investors write checks to a portfolio of startup businesses in exchange for either equity (typically for more established businesses) or the promise of equity (for earlier-stage businesses that don’t have an established valuation yet).
A venture capital investment pays off in two main ways, which are colloquially known as an “exit”:
If the startup grows to the point of making an Initial Public Offering, allowing shares in the company to be traded on a public stock market. If the startup is bought by another company.
VC investors can also make money by selling their holdings to other investors, for example if the startup raises another round of funding and a later-stage investor is willing to buy stock from an earlier-stage investor.
There are a few different kinds of venture investors that we should pay attention to in the context of funding the open social web:
Venture capital funds raise money from “limited partner” sources like endowments, pension funds, and family offices and invest based on a hypothesis. They tend to charge a 2% management fee on the total funds under management, and once the limited partners have made their money back, the fund managers tend to receive 20% of any further profits. Corporate VCs invest according to the interests of a corporate parent. For example, Google Ventures invests in startups that might strategically benefit Google; Salesforce Ventures invests in startups that might strategically benefit Salesforce. Angel investors are, essentially, rich people who invest on behalf of themselves. They tend to invest using a venture model and expect to receive a return in the same way. But because they don’t have any commitments to limited partners or corporate parents, they can invest more or less any way they want. If they particularly want a startup to exist, or if one of their friends becomes the founder of a startup, they might cut it a check even if they’re not sure it will work out.
When it works well: Venture capital works best when a startup has the potential to scale rapidly, reach millions of users, and produce outsized financial returns. It’s especially well-suited for commercial products that address huge markets and have strong network effects (where each new user increases the value for every other user). For open social web platforms that are aiming to replace incumbent social networks, this kind of growth trajectory can align with VC expectations, if there’s a plausible business model.
It can also work when the investor deeply believes in the mission and is willing to be patient with the return timeline. Angel investors or mission-aligned VCs (such as purpose-driven funds) can be effective early partners if they share the founder’s values.
VC funding is most helpful when it allows a team to scale quickly to meet demand or secure talent, or when time-to-market is critical.
Risks and trade-offs: Venture capital comes with heavy expectations: usually of a 10x return on investment within 7–10 years. This puts pressure on founders to prioritize rapid growth, which can lead to compromises on user safety, governance, or long-term sustainability. For social platforms, it can incentivize engagement-hacking and ad-driven models that run counter to community well-being.
It can also distort governance. Venture-backed platforms are typically structured as Delaware C-Corporations; many investors will refuse to make an investment if they aren’t. This corporate structure comes with a fiduciary responsibility to maximize shareholder value. That makes it hard to implement democratic ownership, cooperative governance, or exit-to-community models, unless those are baked in early on a legal level (perhaps by incorporating as a Public Benefit Corporation instead of a C-Corp) and supported by investors. It’s rare for this to happen, and the investors would need to be unusually progressive to accept it.
Once you’ve taken VC investment, you’ve effectively committed to a path: a high-growth company with an eventual exit. That’s not necessarily bad, but it limits flexibility. Many founders who take early-stage VC find themselves building something quite different from what they set out to do.
Because you’re moving at speed, and likely burning a lot of money in the process, a lot depends on being able to raise follow-on funding; even if a VC investor is willing to give an open social web platform a check at an early-stage level, it’s not a given that another VC investor will be willing to give them a follow-on check later on. If that happens to your startup, you might be stuck.
That’s if you can take VC investment at all. Many firms prefer “warm introductions”, which means that they prefer to be introduced to founders by people they already know and trust. At its worst, that means that people from communities with stronger connections to funding — typically wealthy people from a narrow set of demographics — are much more likely to be funded. For example, black women founders received just 0.34% of VC funding in 2022. Some firms also look for “founder pedigree” — assessing whether the founders went to universities like Stanford or have existing capital behind them — that further compound these inequalities.
Not all VCs are created equally, however. There certainly are mission-driven and mission-aligned VCs who operate in a way that’s more values-aligned with the open social web. Some, like Homebrew, even self-invest into their own funds, giving them far more flexibility in how they support startups. It would be a mistake to treat every firm in the space as being the same.
Examples in the open social web: I mentioned the main examples earlier on: Bluesky raised at least $36M, including early funding from Twitter and later-stage investment from Benchmark Capital and others. Farcaster raised $150M from a16z and others in 2024, with a stated focus on building a decentralized protocol and app ecosystem.
Revenue-based investment
What it is: Revenue-based investments function similarly to venture capital: investors write checks to early-stage companies. If the company wants to remain independent, it can provide a fixed portion (10% or so) of monthly revenues to investors in order to pay off their investments. Usually payoffs are set to 2-5X the original investment for early-stage startups, but I’ve seen as high as 15X. It’s non-dilutive by default, but if the startup chooses to raise traditional VC funding, the revenue-based investment converts to equity.
Indie VC was an early pioneer of this kind of investing. The Calm Company Fund was another. The former shut down its original model because its limited partners were unhappy with the arrangement; the latter because they found they didn’t have enough money to operate well under the model. (Indie VC is back with a more traditional VC model.)
When it works well: Revenue-based investment works well when a startup has a clear path to steady revenue, especially from subscription or recurring business models, but doesn’t necessarily want to pursue the high growth strategies required by traditional venture capital. It’s ideal for founders who want to stay independent, build profitably, and maintain control, and for investors who are comfortable trading equity upside for cash returns over time. It can also be a fit for mission-aligned platforms that aim to serve a specific community sustainably, rather than chase growth.
Risks and trade-offs: This model assumes the startup will generate consistent revenue early enough to start repayments, which may not be realistic for infrastructure-heavy or slow-to-monetize platforms. The obligation to repay a multiple of the original investment can also create stress on cashflow if margins are thin or revenue is volatile. And while it's non-dilutive upfront, the conversion clause means equity is still in play if the company raises a future VC round, so it’s not always as clean as it looks. Depending on how the terms are structured, founders may end up giving away more equity than they would have in a traditional VC seed round.
It’s also notable that investors have had trouble maintaining this model. (It’s not lost on me that both Indie VC and Calm Company Fund ran into choppy waters.) Limited partners have been trained to accept the VC model, so success for a fund depends on finding upstream investors who are comfortable with slower growth and less outsized returns. Theoretically these funds are less risky — more of their investments should lead to a return — but it’s not clear that this is actually the case.
Examples in the open social web: No major open social web platforms have publicly disclosed using revenue-based financing so far. I think the model could be a strong fit for these kinds of services; a major piece of my arguments for both Bluesky and Mastodon were revenue-based. But so far, most open social web projects haven’t been charging money for services; there’s a cultural resistance to money, which I discussed at the top of the piece, but many projects have preferred to set themselves up as non-profits and take donations.
Bootstrapping
What it is: When you bootstrap, you don’t take investment at all, except perhaps from your savings. You then attempt to make the business grow using its own revenue, re-investing profits smartly.
When it works well: Out of necessity, bootstrapping reduces the length of the feedback loop between you and your customers to almost nothing. You need them to pay you to keep the lights on (and for you to pay rent and buy food), so you’re forced to be attentive to their needs. It can be fraught (I’ve done it!) but when it works, you end up with a valuable business that you own outright, and can therefore run entirely on your own terms. Companies that have bootstrapped include Mailchimp until its acquisition by Intuit, and GitHub for its first four years.
It also helps if you’re wealthy enough to feel comfortable spending your savings on a startup to begin with. Most people are not lucky enough to be in that position.
Risks and trade-offs: Bootstrapping is financially conservative, but emotionally intense. You carry all the risk, and early mistakes can cost you months — or everything. Without funding, you may struggle to hire help, pay yourself, or scale infrastructure. And while you own 100% of the business, you also carry 100% of the stress.
Examples in the open social web: Write.as, and its parent company Musing Studio, are bootstrapped.
Structuring my fund
So if I were putting real money behind my theory of change, what would that look like in practice? What if we could design a fund that was specifically for the open social web?
In this thought experiment, I’m founding an organization called Pro-Social to fund the open social web. The name Pro-Social is overtly about helping — but, of course, it also clearly name-checks social media.
This is a thought experiment — but it’s one I believe someone should do.
Let’s return to my theory of change and break it down a little:
Founders who are focused on solving problems for real people Who build representative teams and possess a mix of technical, business, and design skills Who are building open social web platforms with the potential to disrupt incumbent platforms That are sustainable and community-aligned Have the potential to strengthen democracy And build generational organizations That provide a real alternative to the status quo Regardless of whether they have wealth or existing startup connections.
Its aim isn’t just to foster the open social web: it’s to support human-centered product thinking, and to help create consumer-grade platforms that real people want to use. In turn, I believe that will attract more people to the ecosystem, benefiting everybody involved and increasing its real-world impact.
When you’re doing something good, you owe it to the people you’re helping to be able to keep doing it. Not only do I want the projects I fund to be sustainable, but I want my own funding model to be sustainable. In other words, not only do I want to invest in a batch of open social web projects, but I want to be able to do it again, and again, in perpetuity.
I’ve broken down the various funding options, as well as my principles and experience. While this is informed by all of my experiences, I owe a particular debt of gratitude to Matter Ventures, whose influence is strong here. Some of these ideas are directly inspired by practices at Matter; some others are things I wished we could have put into place.
It’s not the only funding that I think should exist. Organizations like NLNet and Sovereign Tech Agency are doing great work. And I strongly believe that the EU and other governments should be funding the open social web. My intent is to describe something that sits alongside these efforts.
Here’s how I think it would work.
A dual structure
Having seen the strengths and limits of each model up close — and knowing the kind of ecosystem we actually need — I don’t think we can rely on just one. So here’s what I’d do instead.
Pro-Social is built on the belief that different types of projects require different types of funding. Nonprofit tools that strengthen the ecosystem shouldn’t be forced into a for-profit path, and promising commercial products shouldn’t have to apply for grants. That’s why Pro-Social has two complementary arms:
The Pro-Social Foundation funds non-profit projects through directed grants. Pro-Social Ventures makes values-aligned investments into for-profit startups.
Each tackles a different part of the ecosystem and ensures we’re not forcing every project into the same mold.
We’ll talk more about deal structure further down. For now, let’s start, as all funders should, with the founders.
To select founders, we must first select ourselves
Both the Pro-Social Foundation and Pro-Social Ventures support diverse teams with a mix of skills and a human-centered mindset, as we’ve previously discussed.
In order to achieve a more equitable, representative portfolio, the organization must bake equity and inclusion into its DNA. That means a representative team, inclusive selection criteria, and shared decision-making on investment committees, as well as the following core concepts:
An open application process. Not only is there no need for warm introductions, but they are explicitly disallowed. Every project that applies for funding has to go through the same process from the beginning, starting with filling in a web form.
A clear rubric for evaluation. Regardless of the funding type, projects are evaluated using the same rubric and peer-reviewed, and the answers are made available to all staff with decision-making ability.
Fund the founders, not the project. I believe that long-term success is tied more to founder mindset than to initial product ideas. A project might seem unpromising, but if its founder is smart, willing to test their assumptions, and pivot based on what they find, it should still be considered for funding. In contrast, if a project initially seems promising but the founder is unwilling to waver from their vision even in the face of evidence that it doesn’t work, that should be a mark against them.
Grow a community of founders. Every founder who is funded by Pro-Social joins a community that grows over time. The network effects of this are important: each new founder can draw on the expertise of the existing ones, so the power of the community to effect change becomes greater over time. Not only must funding recipients be great founders, but they also need to be great community participants, with strong personal integrity. There should be a strict “no asshole” rule that particularly guards for the safety of diverse founders, and a collaborative mindset is vital.
Provide free help ahead of time. Pro-Social should design and make available a free, asynchronous course akin to Y Combinator’s Startup School. This would help project founders hone their human-centered thinking, evaluate their core assumptions, and ensure they’re aligned with making their project successful instead of just writing code. Unlike most founder courses, it would also contain lessons about the open social web itself, including its underlying protocols and existing models. At the end of the course there would be an easy on-ramp to applying for funding if founders are ready to take the next step. Even if founders don’t want funding from Pro-Social, hopefully the course would help all open social web founders.
Here’s what each arm would do, starting with the foundation.
The Pro-Social Foundation
The Pro-Social Foundation offers structured grants at three levels:
Flash grants for user research. A small ($5,000) grant that helps a project team validate the core assumptions underlying their product vision, with the express intent of testing whether it is building something that real people will use. Recipients are expected to follow a set process to conduct user research, validate their assumptions, and present a modified version of their product vision that takes these findings into account. These grants are specifically not intended for implementation; they’re just for testing whether the work is worth building at all. Founders who have demonstrated that they follow this process — whether supported by a grant or not — are more likely to receive funding from Pro-Social. Project grants. A larger ($50-100K) grant for non-profit projects that have demonstrated they will build something that is desirable for real users, viable financially, and feasible to build using the time, team, and resources potentially at its disposal. This grant can be used to write code, but is also expected to be used to establish the organization to support it. Ecosystem grants. A larger-still ($100-250K) grant for non-profit projects that have established themselves and have both real-world users and a working strategy for sustainability.
The Foundation does not fund protocol-level work unless it directly connects to an end-user experience. That’s not because protocol work isn’t important, but there are other organizations in the ecosystem who will already help fund it. I see the biggest gap as being human-centered end-user products that are anchored directly in user needs, so that’s what I would want to fund.
Because sustainability of the fund is a core value, it’s important to consider where the money would come from. The Pro-Social Foundation would be funded in two ways: through donations from foundations and individuals who care about the ecosystem, and from profits from Pro-Social Ventures, the for-profit arm.
Which brings us to the other half of the equation.
Pro-Social Ventures
Pro-Social Ventures makes investments into for-profit open social web startups using a hybrid between VC and revenue-based financing: a revenue share with an equity conversion.
It aims to conform to the principles set out by the Zebra movement: profitable but values-driven companies that prioritize cooperation over competition, community over monopoly, and long-term resilience over short-term growth. Of course, each company must be a participant in, and supporter of, the open social web.
Here’s how it works:
Pre-seed: These startups are going from idea to execution. The team almost certainly just consists of the founders. These are the teams Pro-Social spends most of its time supporting.
For these founders, Pro-Social Ventures writes $100,000 checks. After the startup has made its first $200,000 in revenue, this is paid back through a 10% gross revenue share with a 3X cap. It can also convert to equity at 7% of the company with a $4 million valuation cap if the founders raise a traditional VC round instead (in other words, it will automatically convert if a priced round is raised).
(A quick terminology primer: a valuation cap sets the maximum company valuation at which an investor's money converts to equity.)
If the startup is promising, has validated its assumptions, and is not just gaining real users but is beginning to get traction on a business model, it can ask for a follow-on check from Pro-Social. For these startups, Pro-Social Ventures will write a $150,000 follow-on check, which again is paid back through a 10% gross revenue share, this time with a 2X cap and no delay on repayment. It will convert to equity at 4% with a $6 million valuation cap if the founders subsequently choose to raise a traditional VC round.
Seed: These startups have traction, likely have a larger team, and have shown that their product and business model works. They’re growing but need more support. Because Pro-Social Ventures focuses on helping founders move from idea to execution on user-friendly open social web products, it will only cut this deal if there is also a clear gain for the open social web ecosystem.
If the startup hasn’t raised an equity round, Pro-Social will cut a check for $400,000, paid back immediately through a 10% gross revenue share with a 3X cap. This check can convert to equity at 5%, at around a $10 million valuation cap.
If the startup has raised an equity round, or if such a round is currently being raised, Pro-Social Ventures will do a standard equity investment at the same terms as other investors. These checks vary between $250-400K.
Exit to community: Exit to community is a way for ventures to transition into ownership by its community of stakeholders instead of an acquirer or an IPO. This is such an obviously values-aligned idea for the open social web. How this works specifically varies from company to company, but it often looks something like transitioning to becoming a worker-owned cooperative, a community trust, or a decentralized autonomous organization. The Exit to Community site is a great starting point.
Exiting to community needs to be the founders’ choice, but it’s heavily encouraged and institutionally supported. It aligns long-term platform governance with the communities it serves, and reduces the risk of extractive exit outcomes.
For ventures that choose to exit to community, Pro-Social Ventures will reduce its stake at the time of the exit. The original repayment cap is reduced by 40% (pro rata, or reducing to 0 if repayments have already exceeded the new threshold); the conversion percentage is reduced by 25%. For example, a 7% conversion would become 5.25%. Pro-Social will also explicitly not influence governance structure in the new entity. It will also actively facilitate introductions to experts in the process — and those same experts will confirm if a venture’s actions qualify as an exit to community.
Terms: Pro-Social Ventures never takes a board seat, but is always available for help and support if founders want it. It doesn’t demand special preferences or control rights.
The deal is structured like a SAFE note: there’s no maturity date, no rate of interest, and there’s always both a valuation cap and a cap on revenue share repayments. (I’ve omitted valuation caps from the descriptions above, but they should be present.)
If the startup is acquired and there hasn’t been a priced round, but there are proceeds for investors, Pro-Social will receive the greater of (a) 1X its original investment or (b) the amount it would have received had it converted to equity at the agreed percentage. Of course, if the venture fails and is closed, the investment is annulled and founders are still prized members of the community. The effort was worthwhile, and the hope is that everyone can learn from it.
Overall, revenue-based investment is a choice that hopes to overcome a potential lack of traditional venture investors who are willing to put money into open social web platforms. Over time, as more of these platforms become sustainable and valuable, I assume that more traditional investors will be willing to put money in, but in the shorter term, it’s important to get these projects to a self-sustaining state as quickly as possible. I believe that selecting for human-centered, cross-functional teams will overcome some of the problems revenue-based investment has experienced in the past.
A supportive structure
So that’s how projects are funded. But support doesn’t just mean putting money in.
Pro-Social provides a light program for founding teams. It’s not an accelerator, but it builds on some of the things accelerators do well without requiring founders to participate in a curriculum.
Check-ins: For the first six months after funding, the Pro-Social team checks in with the founding team every two weeks. This can just be a half hour call, but the team is available to help them with any challenges they might have. Feedback and advice are given, but nobody is required to follow it. After six months, this can drop to whatever cadence the founders prefer.
Introductions and other support: Like all funds and investment firms, the team works hard to provide useful introductions. Resources are also made available to assist with marketing, sales, design, and partnerships with other organizations.
Summits: Every six months, there’s an in-person summit over three days. The first day is just for founders who have been funded since the last one, and includes an introductory workshop on human-centered design. The following two days contain talks from outside speakers, workshops, and demos, and all funded founders are welcome. Dinners are held throughout. The idea is to ground everybody in the same fundamental ideas and make sure strong relationships can be built between all founders in the community.
Conference: Every year, Pro-Social puts on an in-person public conference about the open social web, which is open to all but free for all of its founders. This contains speakers and talks about the open social web; an open space unconference for everyone in the community to discuss issues that matter to them; and a showcase of Pro-Social-funded projects.
How the foundation and venture arm are supported and support each other
Revenue shares are received earlier in a startup’s life than a payout from an exit event would be. Some of these proceeds go into keeping the lights on at the fund; some are re-invested into the fund; some are donated to the foundation.
The project-validating flash grants are designed to keep the venture fund aligned with the foundation. It’s far cheaper to test a venture’s assumptions quickly using this process than to write a full investment check and find out later that the venture doesn’t work, or that the founders don’t want to deviate from their idea even in the face of obvious evidence that real people won’t use it. In turn, some of the profits from for-profit ventures that have been the recipient of a flash grant are donated to allow the foundation to make grants to non-profit projects.
Initial funding for Pro-Social might come from:
Established companies that will gain if the open social web grows Foundations that believe in the open social web’s potential to support democracy (or conversely, the potential of the existing social media ecosystem to erode democracy) Wealthy individuals with an interest in the open social web for social, financial, or technical reasons, or some combination thereof
Learning from the failure of revenue-based investment funds in the past, and because of the need to remain aligned with the principles of the open social web, I don’t think it’s wise to raise from traditional limited partners.
What success looks like
Traditional venture firms measure their success using metrics like the total value of their investments vs the amount they put in, and the percentage return the firm receives from an average investment year on year. They also inevitably measure the management fees they receive compared to how expensive it is to run the firm.
These are also appropriate for Pro-Social. But success looks like more than that; this is a mission-driven fund that aims to promote a vibrant open social web. We also need to measure the following.
Each metric should be measured in terms of projects funded by Pro-Social as well as in the open social web ecosystem overall, because Pro-Social’s success should be determined in part by the overall success of the space. The aim is for each of them to grow a significant percentage (to be determined after an initial baseline analysis) each year.
Sustainability of projects. Are platforms still operating and growing after 2, 3, or 5 years? Have they found viable models that align with their values? What’s the average lifetime? Number of platforms exited to community. How many open social web platforms have exited to be under the control of their users? Diversity of open social web founders. What percentage of founders in the space self-report as being from traditionally underrepresented groups? Cross-collaboration between founding teams. How many projects are directly sharing findings, outcomes, and code with each other?
Ultimately, if:
The open social web is thriving, with platforms that last, communities that flourish, and founders who reflect the breadth of human experience Pro-Social can continue to fund projects at a constant or growing rate, while supporting its own team
Pro-Social will consider itself to be succeeding.
So now what?
Pro-Social is a hypothetical fund. But it doesn’t have to be.
Funding the open social web doesn’t have to start big. A handful of values-aligned funders, a couple of thoughtful pilot investments, and a real commitment to founder support could begin to model an ecosystem that works differently. I’ve laid out a comprehensive blueprint, which would absolutely take a larger organization to implement in full. But it can also be a menu. Funders can pick and choose the pieces that align with their goals and resources.
The most important thing is to recognize that growing the open social web requires capital — and that doesn’t need to be in conflict with its values. The ideas I’ve proposed might not be completely right, and there are plenty of hard, unresolved questions to answer. There needs to be discussion, further exploration and testing, and lots and lots of trial and error. We won’t get it right the first time, but the only way forward is to start.
We don’t need to solve everything overnight. We just need to begin.
Here are some ways we might:
For funders: Try out one of the structures I’ve outlined — for example, a revenue-share investment — with a small open social project. Learn by doing.
For builders: Start a project aligned with these principles. What does it look like to found an explicitly human-centered open social web platform with a cross-functional team that elevates design and business to the same importance as technology?
For me: I mentioned a free course to help people grapple with human-centered principles when starting an open social web platform. I also implied a worksheet that helps people test their assumptions with respect to their existing projects. These are things that don’t require much capital to produce; I can build them.
For all of us: Let’s start a conversation about these principles. I’d love to bring together mission-aligned funders, builders, and technologists to explore a real-world implementation of this model.
Those are my ideas: what are yours? How might we begin?
However we start, the exploration is worth it. The goal is to build a better internet: one where our platforms nurture communities instead of strip value from them, where we all enjoy privacy and safety, where diverse and vulnerable voices can find a home, and where nobody is locked into software produced by any particular vendor.
The open social web has enormous potential to reshape online discourse, but it can’t thrive without sustainable, values-aligned funding. In this post, I’ve proposed a dual-structure fund called Pro-Social, combining grants for nonprofits with flexible investment for startups, and designed to support diverse, human-centered founders. It’s a thought experiment for now, but one I believe someone should build.
If we want a better web, we can’t wait for someone else to build it. We have to fund it — and build the institutions to make that possible.
Aaron Parecki
