• Annika Schneider (Purpose Foundation): What was your founding impulse, why did you not launch one but two funds?

Achim: Purpose was founded with a specific goal, to make steward-ownership known and accessible to everyone. A big part of that goal was to find a way to invest in steward-owned companies and to help more capital flow to them, creating a dedicated "capital layer" that works for this governance model.

Laura: The need to take action really came from real cases where we saw opportunities that were incredibly inspiring and could have a huge impact, but were lacking money for transformation. It quickly became obvious that this task couldn’t be outsourced but something we had to do, and that we wanted to be fully involved in.

Achim: At the time, people thought this was crazy. They said, "You're insane; no one invests in this, and it won't work." But we went out and found the first people who believed in the idea and wanted their capital to be a force for systemic change. On that foundation, we made our first investments, and we started exploring and testing which terms and processes would actually work. We focused on what was needed to get more investors to gain experience in this space.

 

• Why did you set up two different investment vehicles?

Achim: We noticed that there are two different target groups with different needs. The first group is startups that often require early-stage, riskier growth capital. The second one is established, profitable small to medium-sized enterprises (SMEs) that are looking for succession solutions, buyouts, or simply long-term stability. The risk categories and investment processes for these two groups are distinct, so we decided to create dedicated models and investor groups for each.

Purpose Ventures looks primarily for startups, typically those in Series A. These founders need growth capital and choose a steward-ownership structure while they grow their business. They want to ensure they can promise their employees and other stakeholders that the company will always remain independent and operate according to its values and mission.

Laura: The companies we work with at Purpose Evergreen Capital are generally established, profitable SMEs, often facing succession issues. The founding generation wants to hand over the business without compromising its values or mission. They have few options that guarantee this: a strategic investor or private equity firm might not preserve the company's culture, while an internal succession often requires the new leadership to take on significant personal debt. These companies turn to us to preserve the business's independence and mission through a steward-ownership structure.

Achim: At their heart, both groups are trying to solve the same problem: they want to create a coherent ownership model for their company. We act as their financing partner, supporting them with all steward-ownership-related things and accompanying them as partners throughout their journey, to the best of our ability.

 

• Looking back after almost ten years, how has your approach and focus changed?

Achim: We've made significant progress. We have proven there are several effective ways to finance, buy out, or co-invest in companies at different stages, from early startups to Series A to succession. Other funds are now building on our work and focusing on steward-ownership. Some are even adopting elements of our structure into their own funds. A network of different investors has emerged, who co-invest and share deals. Additionally, best practices are starting to take hold, even though there is still a lot to learn and develop. This is exactly what was part of our mission from the beginning. But there is still a lot of work to be done.

Laura: What we’ve seen recently is that there’s this potential for “copyability” of our funds, but it’s still not happening often enough to say there’s enough capital for steward-owned companies worldwide. So the need is still there: to think even bigger, build on these first experiences, and turn the learnings into new approaches and methods.

Achim: We want to contribute to a system that grows with the market step by step, ensuring that capital isn’t a bottleneck, that the movement of steward-ownership can continue expanding. That’s why we want to take all the learnings we’ve gathered over the past seven years, synthesize them, and channel them into a new investment company or a fund that builds on all of that. And through that make more capital available. We also want to stick with our approach of radically sharing our experience and knowledge through the Purpose Non Profit Work.

As a growing number of businesses face a generational transition due to the “Silver Tsunami”, what are the key challenges in financing a succession for steward-owned companies, and what solutions are needed to address them?

Laura: Right now, we’re still quite alone in this space. There’s some capital that might help, but ultimately, we need a much wider range of vehicles enabling succession in a steward-ownership structure, with different foci on sector, phase, company size, from large firms seeking an alternative to IPOs to SMEs looking to secure their mission. The key is providing valuable expertise to help these companies grow within their business model and mission without taking over control.

Achim: Steward-ownership opens new paths for succession and new structures that aren’t tied directly to having a lot of money or coming from the right family.

Steward-ownership doesn't solve the challenge of finding the right people to step into the role of successors, but the pool of potential successors expands, not only because you don’t have to put in personal money, but also because the transparency and openness of the succession process itself often encourages people from within the company to lean in.

 

• Looking ahead, what do you see as the key challenges and opportunities for PEC and Purpose Ventures in expanding steward-ownership and alternative financing models?)

Achim: Honestly, what it’s really about today is enabling the next Patagonias - purpose-driven and steward-led companies - to grow from the start, or to allow other companies to stay independent through the financing model they choose. The current financing structures don’t just fail to enable the Patagonias of the future to be built – they make it harder or sometimes impossible. Our goal is to create alternative pathways. After having paved the first paths through the jungle early on, today we see a better track entrepreneurs and investors can walk. I wish for many clear paths for all kinds of companies, where the “how” is already figured out, so entrepreneurs don’t have to reinvent it while building their business. It should be as tried-and-true and easy as today’s VC-model, in a way.

Ideally, we’d also demonstrate that steward-ownership is a strong enough case with enough proven data at the fund level for even large institutions being able to join the party. That’s an aspect where we haven’t enough proof and data yet, so I’d leave that as a future goal.

Laura: Another wish would be to enable more investors to co-invest with us and experience first-hand how it feels to approach this differently, like Achim mentioned before, away from the well-known pathways of investments.

It’s amazing to live through an investment process where suddenly everybody has the same goal and is centered around the company’s purpose while respecting each other's needs, without having to use methods of lack of transparency, poker and power play. For that purpose we are actively building an investor community and always welcome new members.

Achim: Yes, one such example is our collaboration with Haferkater (see case study on p. 116). In this case, we worked with earlier investors who were very much needed and important to support a certain phase. When we came into the picture in a later stage, we helped to fulfill the entrepreneur’s deep desire to transform the company to steward-ownership and buy out the previous investors while still rewarding the risk of the earlier investors appropriately. This was only possible because next to us many others joined as financing partners for Haferkater, including many private individuals via GLS Cloud.

 

Thank you for the interview, Achim and Laura.