Financing Alternative Enterprise Project

Alternative Enterprise
August 11, 2022

Even as many entrepreneurs and investors embrace the call to tackle the crises of the 21st century, most continue to employ traditional enterprise structures. This traditional story – where a single founder seeks growth capital from investors who take a significant ownership stake in the enterprise to maximize their return, and runs a company top-down to hit return targets – can lead to mission drift, unintended consequences of business activity, wealth extraction, and the growing gap in power between investors and workers and communities.

There are a host of enterprise models that seek to do something radically different, taking the ownership rights and claim to financial benefit normally reserved for investors, and placing them in the hands of the stakeholders that make the enterprises work. Many impact investors are already familiar with employee ownership forms like worker cooperatives and ESOPs, which allow for governance and/or voting rights for employees.

But there is a range of corporate structures that include other stakeholders, or are able to put a completely different purpose at the center of business operations, thereby nullifying incentives for profit-maximization. Steward Ownership models, such as foundation ownership (e.g. Newman's Own) and Perpetual Purpose Trusts (e.g. Patagonia), shift the goal of a company from enriching shareholders to achieving a set purpose. Other enterprises seek to include multiple stakeholders into the governance process, including some Steward-owned companies, multi-stakeholder cooperatives, and some organizations using the blockchain. Others seek to use these legal models to provide benefits to core stakeholders in more creative and flexible ways, like Employee Ownership Trusts and cooperative holding companies.

Critically, traditional investment terms often do not work with these enterprises, as these enterprises typically do not want outside investors to have a say in operations. As such, most investors are unfamiliar with these models, or at least how to finance them. But because of the potential for impact, many investors have begun to experiment with terms that work for Alternative Enterprises, despite the difficulties.

To support investors interested in alternative ownership and governance, Transform Finance, together with the Doughnut Economics Action Lab (DEAL) and other field partners, is undertaking a project encompassing research, investor roundtables, and training modules.

Project Goals

1. An increased understanding for investors of alternative enterprise models.
2. Clarity around the investment structures that can support alternative enterprise models.
3. Getting capital off the sidelines.

How to get involved

In our current research phase, we are keen to talk to 1) investment partners and practitioners in the field who have direct experience vetting, structuring, and making deals into Alternative Enterprises and 2) investors who are considering Alternative Enterprise as an impact strategy and want to learn more.

We would love to be in touch and learn from you. Please feel free to reach out at

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