What is Steward Ownership Aligned Financing?
A new logic for investment, where capital supports companies without commodifying them. steward ownership aligned financing (SOAF) restructures the relationship between investors and companies around purpose, autonomy, and long-term health.
SOAF definition: in a nutshell
In steward ownership aligned financing, the quality of the investment (i.e. how the investment is structured) and the relationship with the company are designed in such a way that investors become financing partners of the company, while ensuring two core principles:
No commodification of the company as a whole
Preserving the company’s entrepreneurial autonomy
Thus, the relationship between the financing partner and the company is defined by:
- the entrepreneurial control never being overtaken (bought),
- and economic claims being limited in terms of duration, amount, or influence.
Implementing SOAF
Steward ownership aligned financing is a form of investment structured along the principles of steward ownership. It focuses not just on WHAT a company does or WHAT investors fund, but on HOW the investment itself is structured. The nature of the investment and the relationship between the company and its investors take centre stage.
This translates into a different logic compared to conventional investment in three key areas:
Governance
Control over the company remains with entrepreneurs; investors don’t automatically receive power by investing in the company but can be involved in the company’s governance based on their role.
Liquidity
Instead of relying on speculative sales or conventional exits, investors achieve liquidity through alternative paths. Investors and companies co-create financing solutions that align with the company’s long-term goals, structuring repayments to ensure the business thrives well beyond the investment period.
Returns
Returns can be structured in various ways, but economic claims are always limited – either in terms of duration, amount, or influence. The focus shifts from “How much can we make?” to “What is enough? What is a risk-adequate return for the investment? What is a fair compensation for the investor’s contribution?"
This allows the investor-company relationship to fundamentally shift towards a more intentional relationship, aligned with the purpose and long-term development of the company. Steward ownership aligned financing often means new and innovative financing structures and instruments.
Steward ownership aligned financing in practice
Here are some forerunners who successfully developed aligned capital solutions. Learn about securing early-stage capital for startups, achieving successful later-stage financing, and structuring capital to transition SMEs into steward ownership.
VYLD
A fem health-tech start-up that found a unique way to finance their early growth
BuurtzorgT
For a different approach to mental healthcare this company needed patient and aligned capital
Haferkater
Becoming steward-owned through crowdfunding and aligned investors
OGC
How a buy-out of investors can look like in practice. Fair, respectful and with a waterfall structure for payouts
More on SOAF
Now that you've learnt the basics, you may want to go deeper to understand why we need a different kind of capital?
Then we recommend these interviews with leading voices on alternative financing:
Keep exploring
Are you new to steward ownership? Make sure to also read the other three basics chapters.
What is steward ownership?
What is the core of steward ownership? Learn about its two principles and the companies practicing it.
Implementation of steward ownership
The principles of steward ownership have to be implemented in a legally binding way at the ownership level. Overview of how that is done in practice.
Comparisons to other models
How does steward ownership relate to B Corps, cooperatives, ESOPs, and family businesses? A structured comparison.