Dan Miller, the Founder and CEO of Steward, a lending platform for regenerative agriculture, shares his insights on raising capital for business ventures. Drawing from his experience as Co-Founder of Fundrise, he emphasizes the importance of seeking values-aligned, patient, and flexible sources of funding rather than relying on traditional venture capital and private equity.
Traditional investment capital, driven by high returns and liquidity requirements, often creates misalignments with the values and timelines of the business. Capital from private funds is usually not directly owned by its principals, leading to distortions in decision-making processes. The focus on maximizing returns and the extraction of fees by intermediaries further complicates the issue, resulting in a high cost of capital for operating businesses.
Venture capital and private equity are designed for businesses seeking rapid growth and quick exits, but they may not be suitable for all types of enterprises. Miller highlights the challenge of balancing outsized returns and stability, and urges businesses to consider alternative fundraising methods that align with their values and long-term goals.
One alternative approach is direct fundraising, which involves raising money from individuals with a personal interest in the project. However, regulatory hurdles make it difficult for private companies to access a broad investor pool outside of professional investment funds. Miller advocates for creative navigation of regulatory challenges to enable direct, broad-based fundraising for businesses with a mission-driven focus.
Building relationships with values-aligned investors is key to securing flexible and supportive capital that aligns with the business’s goals. Miller emphasizes the importance of focusing on slow and steady growth, nurturing relationships with individuals who believe in the project’s purpose and leadership. This approach, though requiring more effort, can lead to a resilient network of supporters who are personally invested in the success of the business.
In conclusion, Miller encourages entrepreneurs to rethink their approach to fundraising and consider raising capital from individuals who share their values. By building relationships with a diverse network of supporters, businesses can create a foundation for long-term success and resilience. Ultimately, prioritizing values-aligned capital over traditional investment sources can lead to a more rewarding and sustainable business growth strategy.
