Purpose before profit is not something you would associate with startups in general and well-funded startups in particular.
All startups begin their journey with a purpose but as they raise funding, their purpose is also superseded by the quest to bring returns for their investors.
One of the ways that startups have tried to overcome this challenge is by bootstrapping, where entrepreneurs start a company with little to no external investments.
However, a new breed of startups are putting purpose at the front by embracing steward-ownership.
While the idea has caught up big time in Germany, Dutch startup Sumthing wants to lead the way with steward-ownership in Amsterdam and the Netherlands.
Positive impact on nature
Based in Amsterdam, Sumthing is a platform that enables individuals and brands to restore nature in an engaging way.
“Sumthing is the platform where you can donate to restore nature and follow the progress first hand,” says Gijs Schuringa, co-founder of Sumthing.
Schuringa, who primarily looks at growth and partnerships, adds that Sumthing connects “businesses and individuals to a curated selection of nature restoration projects across the globe, and visualise the impact made with the donations, using a variety of technologies.”
They decided to build a platform aimed at nature restoration after experiencing first-hand the lack of feedback or visibility after donating to a tree planting project.
“We decided nature deserves better,” he says, before adding, “because we really are at a tipping point for nature restoration.”
This week saw scientists debate whether they should denote 1950 as the beginning of Anthropocene, a new geologic epoch which saw fundamental altering of the geology, atmosphere, and biology of the earth due to human activity.
While it remains to be formally recognised, there is no denying that we all need to do something and Sumthing wants to be the platform that helps both individuals and businesses take action.
Schuringa says, “We want to redefine the way we engage people and businesses in making an impact.”
Technology to bring visibility
One of the defining features of Sumthing is its ability to visualise each and every donation using technology.
“If everyone joins in and does something, the sum of things can be a huge force of positive impact,” says Schuringa. “That’s why we encourage everyone to ‘Do Sumthing’.”
He says their focus point from the beginning was to bring visibility to restoration projects.
They learned quickly from many nature restoration projects that they would love to operate more transparently but did not have the resources to build the required technology infrastructure.
For these nature restoration projects, the cost of IT and other technology infrastructure required to bring visibility wouldn’t be justifiable.
For Sumthing, this became an opportunity to build a universal platform that a variety of nature restoration projects can use to showcase their work, for free.
In simple terms, Sumthing is not only bringing these nature restoration projects to the forefront but also marketing the technology platform on a global scale.
“We can bring technology into the mix that would otherwise be out of reach,” explains Schuringa, adding, “our ultimate goal is to make them successful.”
The idea is to combine satellite feeds, AI analysis of proofs and deep integration into things like e-commerce, travel and fintech.
“This should ultimately make the entire ecosystem more efficient and more effective.”
Bootstrapping to steward-ownership
At this moment, Sumthing can be described as a bootstrapped startup but it won’t be for long.
For a startup like Sumthing, trying to make a significant positive difference for nature, external investment is not a need but a necessity.
However, the real deal here is how it plans to go about with external funding. The startup has chosen a steward-ownership model that allows it to raise external investments while ensuring the company stays true to its purpose.
“We are currently in the final stage of closing our first investment round, which can help us to further grow the business and realise even more impact,” Schuringa reveals.
The mission of Sumthing is to make nature restoration accessible, engaging, and meaningful to everyone.
At COP15, the UN biodiversity conference, it was once again emphasised that by 2030, three times the amount of money currently available is required annually for ecosystem restoration.
By building a platform that brings together supply and demand for effective nature restoration with results that can be seen, Sumthing is not only plugging a gap but also aiming to offer the scale needed to make it viable.
“We believe the key to reaching this scale in time is to operate commercially,” Schuringa further explains.
“This provides us with focus on delivering value to our clients, flexibility to iterate quickly, and the ability to attract investments that will support us in the initial years.”
While operating commercially, they also don’t want to lose their focus on purpose and hence, the decision to operate as a steward-owned platform.
This allows self-governance, where voting rights lie with the people involved in the company and cannot be sold.
The model allows “investors and founders to be fairly compensated within predefined limits” and the remaining profits are reinvested in line with the company’s mission.
Since steward-owned companies can never be bought or sold, the profit remains a means to achieve purpose and does not become the end goal.
On Sumthing, the nature restoration projects will never have to pay for the infrastructure and Schuringa reiterates “not now, not ever.”
However, when these projects start earning significantly more by using the platform, a shareholder might feel motivated to dictate these projects to pay a service fee.
“For us that would be a nightmare come true, as it would go directly against our founding principles,” says Schuringa.
Through the steward-ownership model, they are ensuring that their mission and integrity comes first and not the profit or motive of a shareholder focused on profit.
Business breakdown
At the roots of it, Schuringa says Sumthing has a structure similar to most startups, which includes a combination of an operating company called Sumthing B.V. and a holding company called Sumthing Ventures B.V.
The real difference is how the shares of the holding company are divided among the key players. Here is a breakdown:
Shares with pre-agreed, limited economic rights:
- Investors – joined together in a STAK
- Founders – each with their own personal holding
Shares with voting rights but no economic rights:
- Sumthing Foundation – governed by mission-aligned Stewards to keep Sumthing true to its purpose.
- Golden Share Foundation – an independent organisation with the sole purpose to ensure that Sumthing’s steward-owned structure is maintained forever.
Sumthing Foundation acts as the ruling body with the de-facto say on all major business decisions while the Golden Share Foundation has a veto right on a select number of decisions related to ownership structure and company purpose.
With the Purpose Foundation not being operational in the Netherlands, Sumthing has aligned with WeAreStewards, a Netherlands-based organisation driving the steward-ownership community.
“You could say that the Purpose Foundation is WeAreStewards’s bigger, international sister,” explains Schuringa.
“There are good ties between the two organisations, and we’ve been in touch already given our international ambitions,” Schuringa adds.
Striking the right balance
While most Dutch startups find it difficult to get early-stage funding, Schuringa says the major challenge for steward-owned startups is finding mission-aligned funding.
He says this challenge is not specific to Sumthing but one commonly cited by other entrepreneurs within the steward-owned community.
There seems to be a growing appetite to invest in steward-owned ventures but there aren’t a lot of professional investors familiar with the concept.
It won’t be a mistake to call steward-owned companies in the same phase as that of impact startups half a decade ago.
The real challenge, however, is that investors have neither invested in a steward-owned venture nor are they allowed to invest in them due to their investment criteria.
“This makes finding funding for your startup much more difficult,” Schuringa emphasises. “Luckily there are already a few brave pioneers that embrace this new model”.
Another challenge, he says, is the legal complexity required to become a steward-owned organisation.
“The required structure and accompanying documentation required to become steward-owned is much more complex than ‘regular’ startups,” he explains.
One of the ways to overcome this challenge, per Schuringa, is to find the right balance between flexibility to accommodate future investment and rigidity to ensure the structure cannot be altered.
For steward-owned companies, Schuringa argues that there is an additional need to be very well informed and be smart about future scenarios.
A movement of positive change
While the concept of steward-owned ventures is relatively unknown, Schuringa says they are seeing younger leaders in family funds stepping up to make more purpose-first investments.
He is also appreciative of the work done by WeAreStewards in spreading the word and sees the next three years being a breakthrough moment for the business model.
The Dutch tech ecosystem has never shied away from adopting alternative business models and we could see the same with steward-owned companies in the coming years.
However, the country needs to steer away from the current regulatory system with a hard split between commercial companies and foundations or charities.
“I think we’re at a point where we need to reevaluate this split, as more and more businesses are working through solving societal and environmental problems,” says Schuringa.
For him and his co-founders Mike Odenhoven and Guido de Rooij, the real impact of Sumthing would come in the form of unleashing a movement of positive change so big that it can reverse the damage that humanity has done and is still doing to nature.
It is a tall order but Sumthing, which relates itself to Patagonia, Ecosia, and Signal, is up to the task by lining up to the global goals set by the International Union for the Conservation of Nature to measure and quantify that impact.
As the startup prepares to finalise its funding round that will accelerate its business development and tech team, it is also working on a major rebrand.
In addition to nature restoration, Sumthing is also put in an unenviable spot of leading a new business model for startups, one that moves puts purpose before profit.
Its success will not only mean success for nature but also success for all those entrepreneurs looking to deliver meaningful impact through their startups.
Read the orginal article: https://siliconcanals.com/news/startups/sumthing-gijs-schuringa-steward-ownership-bootstrapping-interview/
