Financing Instruments: How do things change on the technical side?

 

So having laid out the underlying essence of steward-ownership-aligned financing, let’s have a look at the technical side of things – financing contracts and cap tables. Steward-ownership-aligned financing usually means using nontraditional and innovative financing structures. There is a spectrum of ways and instruments to implement steward-ownership-aligned financing, with a lot of space to fit the individual needs and situations of companies and investors. 

Of course bootstrapping and normal debt work just fine, but what if you have capital needs and the investment is too high, risky or early-stage to be fully covered by loans?

While we will dive deeper into the specific ways to structure steward-ownership-aligned financing later, it’s important to note that this approach typically involves structures that extend beyond traditional equity. There are a variety of instruments available, ranging from normal loans, mezzanine instruments to non-voting (redeemable) equity instruments, all of which can be creatively shaped to fit the needs of the company and its investors. The range of what can be used is wide, but the terms need to be adapted to make the different instruments compatible with steward-ownership-aligned financing. While this may sound complex, it is absolutely possible, has been successfully implemented before, and we will share concrete examples later on to illustrate how these structures can work in practice.