When is the right time for steward-ownership?

When is the right time for steward-ownership? A commonly asked question.

It reminds us of the story of Vyld. Founder Ines Schiller and her idea of Ocean Saving Period products (ocean-friendly and healthy period products from seaweed) was, according to all the classic experts;
> neither feasible nor scalable
> not investable in Steward-Ownership
> more so, every startup MUST have an exit strategy... she was told.
 
But Vyld persevered. With full faith in:
- ‘A business can be a prototype of the world you want to live in’.
- ‘It just doesn't make sense to produce a great, sustainable product, but then have an exploitative company structure and culture’

So they built an innovative Mezanine financing as a construction of such a ‘structured exit’.
Vyld developed a mezzanine financial instrument that combines advantages of equity and debt capital and enables an appropriate return for investors, while at the same time ensuring Vyld’s independence. Instead of a conventional equity round, they offer a profit share. The agreement ends as soon as the return is achieved.

“Steward-Ownership is not an obstacle for fundraising, it is a good filter fo find eligible partners” - Ines Schiller

Mission impossible? Not at all: Vyld closed its seed round with a seven-figure sum.

They deliberately chose this kind of alternative funding path because the old VC model with its assumptions of exponential, infinite (hyper)growth and ‘the winner takes it all’ is not longer an option for planet and society. So Vyld just ignored the mantra of ‘the economy just works that way’.
 
This is why Vyld is a wonderfully inspiring story. But above all, an inventive case for alternative ownership.
 
Back to the difficult question when transitioning to Steward-Ownership: WHEN? Sometimes it does indeed come too soon. >> Be an enterprise first.

But sometimes it also comes too late. And a company is in a lock-in with funders. Remember the Stapelstein case.

Yet above all, we learned: better too early than too late.

That's why we organise Steward-Ownership-explorations. Very accessible and at pace, together with the initiators of a company we explore the various components that provide insight into whether Steward-Ownership is (now) the right choice.

Do you dare? Pursue Vyld?

We are a non-profit guide, supporting companies on their path to steward-ownership. Get in touch.

Ines Schiller and Melanie Schichan

What if it’s absolutely NOT the right time for steward-ownership?

You can start with a traditional ownership structure and transition to steward-ownership later. This approach is often suitable for many founders and remains a valid option. Others, however, prefer to establish their company in a steward-ownership model from the start. There are several important factors to consider when deciding what’s right for you:

Typically:

·        The later, the more complex and costly: Converting to steward-ownership later can be more complicated and resource-intensive.

·        A strong signal to stakeholders: Early adoption communicates to customers, employees, and partners your company’s commitment to its mission.

·        Clarity and filtering for potential investors: Steward-ownership clarifies from the beginning that there will be no future sale of the company. Investors can expect risk-appropriate and potentially high returns, but the nature of their investment will be different.

·        Laying solid foundations: Early engagement with topics like governance, motivation, protections, and expectations can unify founders around a shared purpose.

If you decide to start with a conventional structure, this document will help you incorporate steward-ownership principles and make it easier to transition to full steward-ownership when the time is right.