FINANCE MIX

We’ve found that a successful financing strategy for steward-owned companies often includes a thoughtful mix of grants, loans, mezzanine capital and non-voting equity. Early on, many companies bootstrap, secure grants, or raise small investments from business angels. As they grow – even before reaching profitability – companies might turn to bank loans, performance-based finance, or aligned equity investors. By using a blend of funding sources, companies might better navigate different phases of risk while keeping costs manageable. 

Unlike the typical venture capital model, which often involves raising as much money as possible upfront and figuring things out as they go, companies with other growth trajectories and funding possibilities can benefit from a more iterative approach. Here, financing is raised gradually, one round at a time, with each round tied to clear milestones. This can mean focusing on tangible goals, such as reaching specific revenue or profitability levels and stabilizing before moving to the next stage of funding. With this strategy, companies can grow at a pace that aligns with their mission while also giving investors confidence through a clear and measurable roadmap, which in turn often results in more favourable terms in subsequent funding rounds (read more about different growth trajectories and financial needs here).  

Also, by setting clear milestones and building steadily, the company reduces the pressure to grow at unsustainable rates and aligns its growth trajectory with its mission and long-term goals – particularly important for steward-owned companies.