2020 in Review & 2021 Update

Open letter from CEO Pia Mancini to Open Collective's investors

Wow, 2020 was one rollercoaster of a year. We are just now catching our breath!

What really matters first: we have been humbled by the groups that came together on our platform and across our fiscal hosts to help each other through the worst possible times. People around the globe showed up for each other on Open Collective and we are thrilled we were there for them as well.

Amidst the pandemic, hundreds of mutual aid groups activated around the world. Amidst uncertainty, funders created major coalitions to support open source software and public digital infrastructure. Amidst political and environmental crisis, Collectives worked for climate justice and social and economic justice. We've been privileged to support thousands of amazing communities.

We are lucky to be able to do this work, and grateful for your role in that. Please take some time to read about these groups, and support them by sharing and funding their work.

2020: What happened?

Our numbers really started to turn the very positive mid last year. We ended on a high note in December, breaking $100k in monthly revenue!

Numbers Overview

• New Collectives → up 3x to 4,000+
• Total disbursements → up 3x to $8m+
• New financial contributors → up 2x to 27,000+
• Total $ held → up 2x to $14m+
• Revenue: → up 3x to $510k

Yearly revenue crossed $510k last year, up 142% from 2019, and we spent $674k. We still have ~$600k in the bank. If this trend continues, and we are conscious of our burn rate, we will be profitable this year.

One of the numbers that makes me happiest is $15M raised across our Collectives for the year. That is a lot of economic power going into the hands of impact communities around the world. Other positive trends: new Collectives are up 154% and new contributors are up 149%

One metric we are tracking closely, which I’m not as happy with, is the revenue ratio between one-time and recurring contributions. Recurring rate was 14% 2019 and 16% 2020. While this makes sense because we are seeing more large donors coming in with big checks, I still want to reduce this gap. We are going to work on PayPal recurring donations this year to improve this stat.

Tipping Model

As a quick reminder, last year we decided to move to a platform tips model instead of a 5% fee on contributions. This was a bold move, but our experiment during the early months of the pandemic was very promising, and we feel the tipping approach aligns our business model with our mission.

Since this change, platform tips have consistently been greater than the 5% we were taking before. And the number of transactions where the payer has opted to give a tip has been growing nicely, now sitting at 66%!

Revenue Sharing for Fiscal Hosts

At the end of 2019, we launched paid host plans based on the number of Collectives hosted.  We tried that out in 2020,  and learned that it didn’t work. The paid plans were too complicated, and misaligned interests, because hosts were disincentivized from growing, which is the opposite of what we and they wanted.

So we ditched that idea and created a new model that feels right for us and the community we serve. We have now rolled out a revenue sharing model for fiscal hosts: app store style, we charge 15% of the revenue hosts generate on our platform.

The reception so far has been great, with enthusiastic feedback from hosts. We don't have numbers yet, so I’ll update in Q2.

Product Overview

2020 was about cleaning house, working on core flows, and lowering barriers:

• We improved the contribution flow to allow for guest contributions, platform tips, and better information management.
• We redid the expense flow with invitations to submit expenses, one-click transferwise integration for payments, MVP for grantmaking capabilities, and upgraded the PayPal API to accommodate batch payments and lower the cost.
• We improved navigation across our platform, together with a new design for Collective pages.
• We redid the host dashboard to enable more efficient management of all finances, including 2FA for more secure payments.
• We deployed moderation tools to help Collective admins fend off spam in their communities.
• We created Funds, a scaled back, less social option for larger initiatives. Funds drove a big part of the revenue we saw in the last Qs.

2021: What are we up to?

We did some soul searching during a values and mission workshop on our last retreat, and we refined how we think about our purpose and strategy.

Our goal is to catalyze impact by enabling communities to have economic power, providing them with tools to be financially independent and unlock access to funding.

Our core strength lies in providing an open finances platform to receive and disburse funds and a lightweight legal entity as custodian of those funds.

2021 will be about deepening our core strengths:

1. Building up our own non-profit Fiscal Hosts and scaling up adoption by third party Fiscal Hosts (with a shared revenue model.)
2. Facilitating more contributions to Collectives
3. Facilitating disbursement of funds.

Taking a longer view

For the past 5 years, we focused almost solely on the first part of the life cycle of Collectives: Getting up and fundraising in no time with the minimal hassle. We are now taking a longer view and considering the whole life cycle. From adoption (how we onboard them) to maturity (how we retain them as they scale) to graduation (what services can we offer after they become their own legal entity). This view is the framework for the roadmap for 2021.

Roadmap Ahead

1) Building up Fiscal Hosts
I am spending substantially more time on the Open Collective Foundation and plan to keep this up for the next few months. OCF went from holding $300k for Collectives in 2019 to +$5M at the end of 2020. A good percentage of these are Funds we put together ourselves like the Digital Infrastructure Research Grants and the Internet Freedom Technology Fund.

We launched the Gift Collective in New Zealand and we have plans to move more into Europe, the UK, and (potentially) Canada this year.

We have some work to do to reduce the complexity our users face when they navigate the platform + fiscal host combo. One way we’re addressing this is by whitelabeling the platform for large partner hosts, which will enable hosts to highlight their brand and customize the experience, taking more responsibility for crafting their user journey, and presenting users with a single entity, with the link to Open Collective in the background.

2) Facilitating Contributions
We need to keep improving how Collectives receive contributions. This year, we will upgrade PayPal for recurring subscriptions, create a contribution flow you can embed on any website, enable donations in public stock (more on this on a separate email), better integration with GitHub sponsors, and more donations in crypto.

3) Facilitating Disbursements
Large Fiscal Hosts (like the Open Source Collective) are currently holding $4M+ of unspent funds (from 10M+ total raised). We want to improve the options for disbursements from Collectives including virtual debit cards linked to Collective balances and improved features for grantmaking funds and cash grants from mutual aid groups.

Employment Services

We are planning a partnership with OysterHQ from Tony Jamous, one of our investors (Hi Tony!), to enable Collectives to hire employees and contractors, and provide HR services. It’s part of the long view I mentioned before: we want to support communities as they grow and scale. This is one of the projects that excites me most about this year. We are creating jobs and giving folks a path to be employed by their community (with benefits!)

Team

The team has done amazingly this year! We are in that moment of growing substantially, but not quite comfortable enough to do major recruitment. That plus the isolation has been hard on us. Despite this, the team has been very stable, and everyone is leveling up consistently. I couldn’t be happier with the group of people that make all this possible.

In the short term, we are hiring a Product Lead (we are thrilled about this person, more soon!), a new ED for OCF and OSC and a part time QA/Documentation role.

Xavier has transitioned out of all his positions in Open Collective into a role as a board member and advisor. Open Collective is repurchasing his outstanding shares.

That was a lot, I know, but I hope you are excited as I am about the work we do! We are fighting the good fight, and are grateful for your support.