Rally Software’s IPO Set to Provide $1.3M for Colorado Nonprofits

10/7/13Follow @MichaelXBD

An idea planted more than a decade ago is days away from bearing fruit, as Rally Software Development’s initial public offering is about to yield about $1.3 million for Colorado nonprofits.

Rally (NYSE: RALY), a software development company based in Boulder, CO, donated 1 percent of the company’s founding equity to local nonprofits, and that gift is set to pay off after the post-IPO lock-up period ends Wednesday. The company was founded in 2001 and went public this April.

Rally’s share price was $28.19 at the close of trading Monday. At that price, shares donated by Rally to the Community Foundation Serving Boulder County are worth $698,914, which the nonprofit says it will use to support nonprofits in Colorado. Rally also has earmarked a small amount of money for nonprofits in cities where it has branch offices.

Rally also donated shares to the Rally for Impact Foundation, and those shares are worth $631,343.24 at today’s value. Rally For Impact is out to encourage the training of “citizen engineers” who will use the skills they develop on projects that tackle social issues. Rally employees oversee the foundation.

Although the final dollar amounts aren’t set, Rally founder and chief technology officer Ryan Martens said the commitment has had an invaluable effect on establishing Rally’s identity.

“It created a snowball effect,” Martens said during an emotional party the company hosted at its Boulder headquarters. He believes it helped attract better employees who were dedicated to Rally’s business and social goals. It also set Rally on a course that would lead to the creation of Rally for Impact and the company’s decision to become a certified benefit corporation, which commits the company to achieving social and environmental goals that are tracked by a third-party firm.

The idea of donating 1 percent of the company’s founding equity to a nonprofit has been gaining adherents, both nationally and locally. Martens cited the work done by Salesforce.com and the original Entrepreneurs’ Foundation in Silicon Valley as examples.

In Colorado, Rally helped found the Entrepreneurs’ Foundation of Colorado (EFCO), which has about 50 active members, many of which have given 1 percent of their founding equity to the foundation. Following an exit, EFCO passes the money it made from selling its shares on to nonprofits it has selected with input from the donor companies. EFCO also handles administrative work on behalf of the companies.

EFCO administered Rally’s donation, and it’s the second major exit that has yielded several hundred thousand dollars for the foundation. In 2010, the foundation raised about $200,000 following Jive Software’s IPO (Nasdaq: JIVE), according to EFCO executive director Morgan Rogers McMillan.

EFCO obtained shares in Jive because Filtrbox, a Boulder-based startup, had donated equity before Jive bought it in 2010.

Rally’s donation is the first that comes from a local company’s IPO.

The outcome is what Martens had hoped for, but it was beyond what he actually envisioned years ago.

“We didn’t know EFCO would take off, we didn’t know we’d donate not only the 1 percent but also create Rally for Impact, we didn’t know our employees would join in,” Martens said.

Michael Davidson is the editor of Xconomy Boulder/Denver. He covers startups, venture capital, clean tech, energy, aerospace, telecoms, and whatever else happens above 5,280 feet. Contact him at mdavidson@xconomy.com. Follow @MichaelXBD

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