Sharing the upside: How Q4 Inc. found a unique way to give back

Darrell Heaps is both a serial entrepreneur and a serious cyclist. Q4, a leading provider of cloud-based investor relations and capital markets solutions, is the third company he’s founded. And his passion for cycling helps explain the 20 bicycle racks that dominate the lobby of Q4’s global headquarters on Toronto’s trendy King Street West. The tagline above the racks reads: “Eat. Sleep. Ride. Repeat,” and on the opposite wall, the life-sized mural of a nearby streetscape is emblazoned with the caption, “Enjoy the ride.”

 

It’s a great metaphor — and not just for cyclists. Heaps routinely logs 150-250 kilometres a week on his bike, and Q4 Inc. actively encourages its 124 employees worldwide to attend to their health and wellness as they work hard to maintain Q4’s growth. “Hustle. Grind. Win. Live,” are the company’s core values, and Q4 hosts a quarterly employee appreciation week to help employees refocus on the ‘live’ part. Despite having big goals and aggressive growth targets, both Heaps and Q4 still find time to enjoy the ride and give back to community.

 

“When you start a business, you’re very inward focused: you have objectives and targets, you’re raising money, you’re growing rapidly, and you’re trying to hit your targets. Your world can become very myopic,” says Heaps. “But as your company grows, and it gets to a certain point in its growth, you realize that it has a broader impact in the world. A company is much more than its P&L,” he observes. So Heaps embarked on a broad initiative toward greater community involvement and employee engagement. As part of that, Q4 pledged a small share of the company to the Upside Foundation in spring 2017.

 

Why would a company donate to the Upside Foundation, instead of donating directly to charity? Because privately held companies like Q4 have limited liquidity. There’s a perception that fast-growing tech companies are flush with cash due to high valuations and multi-million-dollar funding rounds — but in fact they’re pretty cash poor. “In the early days, you’re just hustling and trying to build a sustainable business. How can you donate when you’re perpetually burning money,” asks Heaps. The answer? Donate options instead of cash — which is where the Upside Foundation comes in.

 

“Upside offers a rare model that allows you to be a good corporate citizen and give back to your community without expending a lot of equity or cash,” says Heaps. You can take what’s most valuable in an early-stage company — not its cash flow, but its promising future — and set aside some of the upside. “Typically early stage companies can’t donate stock options, but the Upside Foundation gives startups a mechanism to do that,” says Jennifer Couldrey, the Executive Director of Upside. The Upside Foundation offers early-stage, high-growth companies a way to share their future financial upside.

 

How does it work? Companies pledge to donate stock options or warrants to a charity of their choice, and when they have a successful liquidity event like an acquisition or an IPO, it’s converted to a cash donation. To date, over 200 companies have signed on, including some recognizable names in Canadian tech, such as Weatlhsimple, Wattpad, Hopper and Espresso Capital. Q4 jumped onboard at a pivotal moment, making their commitment on June 30, 2017. In the process, they helped the Foundation achieve its 150×150 goal: to have 150 companies make a philanthropic commitment in time for Canada’s 150th birthday.

 

Aside from the patriotic timing, Heaps says Q4 was inspired to get involved by the company’s client base. “All of our clients are large publicly traded companies. We saw that corporate social responsibility was becoming a consistent theme among them, and we began thinking about how we could do it,” says Heaps. “It’s important to give back. We all spend a tremendous amount of time working, so our work should have a bigger impact than just a paycheque,” he observes. “Enjoy your life, enjoy your work, contribute to your community, and give back.” Like the mural says: “Enjoy the ride.”