With the development of steward-ownership and a rising community of practitioners, a critical challenge emerged: How to finance these companies. It became clear from the beginning that steward-owned companies need aligned financing and that mainstream financing often doesn’t sufficiently cater for the needs of companies that rewire their DNA.
You cannot rethink ownership without having to rethink financing. Talking about ownership means talking about money and power – and steward-ownership effectively rethinks the relationship between money and power. So what does this mean for investments into these companies or companies that potentially want to move towards steward-ownership in the future? This is what this whole section is about. We have collected inspiring stories of steward-owned companies and their financing structure, interviews with experts and of course, also a 101 on the most important aspects.
Every company is unique, with its own vision, mission and purpose. To truly succeed, it’s essential to find financing that not only meets your needs but also aligns with your values and your vision for the company and your role in it. This means stepping away from supposedly simple, “normal” paths and instead focusing on what truly matters: finding ownership and financing structures that are coherent with your values of stewardship and entrepreneurship, the economy you want to build and the needs of your company.
Different companies need different solutions – and the landscape of financing has become disproportionately skewed towards conventional equity investments being the only solution out there. It’s time to burst this bubble and recognize that many other finance models exist. Models that could, for some of you, be a better fit for your business. Venture capital and private equity are great for some companies, but they are not the only “normal” form of investments, they are just one model amongst many others.
Between traditional bank loans and conventional equity, there is a spectrum of financing options that are often overlooked. This in-between area is full of possibilities for entrepreneurs who need something different – something that aligns with their unique business model and mission. And steward-owned companies are far from “one-size-fits-all.” Instead, they reflect the diversity of a thriving ecosystem, much like permaculture: a system rich in variety rather than a uniform monoculture. Each company has its own mission, business model, market environment, stewards in the company, life stage, funding history and investors – all of which influence its financing approach. These differences shape their distinct approaches to financing, creating unique “flavours” of steward-ownership- aligned financing. Yet, despite their diversity and different approaches to aligned financing, they share a core foundation: their financing solutions are (or strive to be) deeply rooted in the principles of steward-ownership.
More and more entrepreneurs, investors, customers and communities worldwide are longing for a different approach to business – a different way of thinking about enterprises and the structures and relationships we build in and around them. They are looking for structures that are coherent with their understanding of entrepreneurship, their vision of a healthy economy and healthy businesses creating good products, services and value for customers, employees, communities and the planet.
This search for new models is particularly visible in the investment world where the demand for alternative, less extractive, regenerative or innovative forms of financing are becoming prevalent. But when talking about new forms of investment, it is not just essential to talk about what we invest in, but in order to align structure with intention, we also need to look at the how of investments: the investment structures and structures of the companies that are invested in.
But what exactly does this mean for investments into steward-owned companies or companies that potentially want to move towards steward-ownership in the future? How do entrepreneurs still raise the necessary capital to pursue their entrepreneurial vision while adhering to these principles? And how can investors participate in these companies? This is where we dive into the fundamentals of steward-ownership-aligned financing.
When we at Purpose first started supporting companies transition to steward-ownership in 2016, one question quickly became clear: How do we finance these companies? If we want to see more steward-owned businesses in the world, we also have to think about where the capital would come from and what kinds of investment models could foster them. But this understanding doesn’t emerge from theory alone; it requires trial and error, hands-on experience, and learning from others.
That led us to found Purpose Ventures (in 2017) and Purpose Evergreen Capital (in 2018): two investment funds dedicated exclusively to steward-owned companies – one focused on startups, the other on more established businesses. We invested alongside co-investors to explore and learn, in practice, how structures for steward-ownership-aligned financing could look like.
We connected and collaborated with various investors, thought leaders, social innovators and practitioners, many of whom you’ll also hear from in this chapter.