• Why did you start Karma Capital? What motivated you to set up a fund in steward-ownership?

Theresa: We founded Karma Capital because we are deeply concerned about the growing inequalities in society, especially wealth inequality. Steward-ownership provides a powerful solution to this challenge. At the same time, there’s a significant gap in capital markets for “profit for purpose” businesses. Most companies are either fully profit-driven (often in an extractive way) or operate as nonprofits. Very few exist in between: companies that aim to be financially successful while staying fundamentally committed to a greater purpose - something steward-ownership enables. These businesses want to grow sustainably but often struggle to access suitable capital because they don’t fit traditional investor models.

That was the opportunity we saw: to tackle inequality through both organizational and financial innovation, with the goal of building an economy that truly serves people and the planet. This mission drives everything we do.

 

• Can you give a bit of backstory? How did Karma Capital come about?

Karma Capital was founded in 2018 as an investment holding company, in which my co-founder Sebastian Klein reinvested the profits from his entrepreneurial work into further startups. When Blinkist was sold - a company that Sebastian co-founded earlier - he decided to give away 90% of his personal wealth, which laid the foundation for our work. Building on this, Sebastian, Nikolas and I professionalised and established Karma Capital as a steward-owned company aiming for co-creating multiple funds embedded in a holistic theory of change. In shaping our fund, we have been inspired by the pioneering work of Purpose on steward-ownership. We have been in exchange for many years and are now building on much of their foundation.

 

• What’s your investment philosophy?

We follow a systemic investing approach that goes beyond traditional impact investing. The difference lies in our philosophy: we use the mindsets, methods, and tools of systems thinking to understand and address the root causes of social and environmental challenges. Instead of treating symptoms, we aim to use capital to transform entire systems, especially the venture capital market system in Germany, from within.

To do this, we design investment strategies that focus on key leverage points for real change: developing fair finance vehicles, creating new incentives, and shifting narratives. We work with both return-oriented and philanthropic capital.

Unlike traditional venture capital, which targets exponential growth in individual companies, we emphasize sustainable, long-term growth across the portfolio as a whole.

In steward-owned companies, this translates into healthier profitability metrics, earlier breakeven points, and more resilient business models. We also expect lower insolvency rates, because capital is allocated more efficiently and integrated into long-term business development.

By aligning financing with purpose rather than quick exits, we support a diverse mix of businesses and ideas, which strengthens market resilience in times of crisis. For us, success is not measured by financial gains alone, but by the collective positive impact of the companies we back and the systems change they help create.

 

• Let’s take a look at the fund structure you chose for your steward-ownership fund. Which challenges did you meet when looking for the right structure?

We initially aimed for an evergreen model, as we believe companies shouldn’t be pressured into quick paybacks. However, the market demonstrated a strong preference for a closed-end fund structure. Given today’s geopolitical and societal uncertainties, investors are seeking greater predictability. Our solution is a 10-year fund, designed to provide a clear timeframe that balances investor expectations with the flexibility companies need for sustainable growth. A significant portion of the carry flows back into our nonprofit entity to support systemic change. Additionally, we tailor individual contracts to accommodate the specific timeframes of each business within the overall 10-year fund structure.

 

• Which structural elements mirroring steward-ownership did you integrate into your organizational set-up?

 

• And on the fund level?

On the fund level, we built a classic VC structure with a 2 % management fee and a 20/80 carry split, meaning profits are shared so that limited partners (LPs) receive 80% and we receive 20 %. At least half of our carry is reinvested into our nonprofit for further systemic work.

We invest using a variety of financial instruments, either debt or equity, including subordinated loans, convertible loans, profit participation certificates, silent partnerships, and equity with dividend but no voting rights. Steward-ownership principles and non-extractive business practices cap the returns on the equity side. In accordance with that we decided for our equity investments in the fund to be limited to 2-3x on average. When blended together with the debt investments, this results in an expected return on investment of 3-6 % annually for investors.

 

• And now, what’s the next step? What’s your vision?

Our vision is to transform the capital market over the long term and make steward-ownership more mainstream. More and more entrepreneurs, next generation wealth holders and business angels are looking for more than conventional investing with philanthropy on the side. We want to prove that our hybrid model works and help scale the market for profitable, purpose-driven businesses that are not focused on quick exits.

To achieve this, we need to mobilize significant capital and open up new ways for funders to participate. At the same time, we want to actively inspire and enable others to build funds like ours, integrate steward-ownership into existing networks, and make the approach accessible and relevant to a much broader audience. By sharing our concrete learnings as a blueprint, we want to shift steward-ownership from a niche idea into a widely adopted mainstream model.

In Germany especially, we see huge potential when steward-ownership also reaches later-stage and mid-sized companies. This could unlock far greater capital flows into regenerative organizational structures and generate even greater systemic transformation.

 

Thank you for the Interview, Theresa.