General VC Questions

Should a VC firm avoid investing in public benefit corporations?

Asked by:
Mar 23, 2024
What terms should we look out for that are particular to PBCs? 

Does having PBCs in a portfolio cause concern for LPs?
1 answer
Accepted Answer
Mar 25, 2024
Not necessarily. Typically public benefit corporations (PBC) are taxed as a corporation like a C-Corp. 

That being said, a PBC status may make it more difficult for the company to secure capital. This is because the founder has to explain to investors why they are doing this, which increases friction. You need to make sure to DD the underlying structure of the company if there are additional reporting requirements for the company and what the impact is on their business. 

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