Financial instruments for steward-ownership-aligned financing

The foundation is set, it’s time to explore your tools.

You've worked your way through the deep dives into returns, liquidity, governance, and investment relationships. These chapters have laid the knowledge foundation for your steward-ownership-aligned financing journey. Now it's time to explore the technical possibilities – the structures and instruments through which these principles can be implemented. We'll examine various financial instruments that have been used in steward-ownership contexts.

Here’s also where we shift focus: from principles and functionality to technical implementation. What does this mean?

Well, if you’ve decided that your investor should have e.g. a veto right on a specific topic, the next question becomes whether you want to embed this veto right in a contractual agreement (debt-like) or within an equity-based instrument (shares). So, exploring the range of technical options available will help you determine the most suitable structure for such arrangements.

Steward-ownership-aligned financing means using mostly non-conventional and innovative financing structures going beyond traditional equity, but ones often built on familiar instruments. There are a variety of instruments available here and the range of what can be used is wide: steward-ownership aligned financial instruments can be modelled using both equity and debt, or equity that incorporates debt-like structures, or debt that is twisted to take on equity-like features. The possibilities are manifold, and the appropriate financing structures should be adaptable to fit the specific needs of your business. While some instruments may inherently align with the principles of steward-ownership, others might require adjustments or revisions to be compatible with steward-ownership-aligned financing.

By the end of this chapter, you'll be equipped with the tools to design your own solutions based on what works for your unique situation.