Funding your mission

Interview summary

Esme Verity recounts her entrepreneurial journey, starting with selling jewelry as a child and evolving into building businesses with purpose. She describes her inspiration from Zebra’s Unite, which champions balancing profit and impact, and how this ethos shaped Considered Capital to support alternative funding models.

Esme challenges the allure of venture capital, highlighting its limitations for most businesses. She advocates for redefining success and purpose, tailored to each entrepreneur’s mission and impact goals, rather than chasing conventional benchmarks like VC funding.

Esme emphasizes the importance of defining clear purpose and impact guardrails for entrepreneurs to avoid mission drift. She highlights the role of governance structures like mission lock to align investor and founder values, ensuring sustainable growth and impact.

Esme outlines steps for exploring funding alternatives such as revenue-based financing and cooperative models. She stresses clarity in mission, learning from others, and aligning with open-minded investors to build sustainable, purpose-driven businesses.

As a solo founder, Esme shares her strategy for staying joyful: reflecting on her positive impact through a "joy document" of gratitude messages from others. She underscores the value of reconnecting with the purpose behind one’s work during tough times.

Any type of journey is a success if you know what success looks like for you.

Esme Verity

Transcript

Esme Verity: Any type of journey is a success if you know what success looks like for you. Success shouldn't be, I've raised a hundred million from venture capitalists because that money is going to take you on a certain journey and it might not be right for you. Take a step back and be like, what do I want? What is my mission here? Do I want to sell my business? Do I not? How important is my purpose and my impact?

Barrak Alzaid: You're listening to Joy of Business, a collection of audio essays, timely discussions, and stories featured on digitalentrepreneur.com. That was a clip from Esme Verity, founder of Considered Capital. In our conversation, she shares how she's redefining entrepreneurship to balance purpose and profit. Keep listening to learn about how she redefined success and discusses how entrepreneurs can create meaningful impact and stay true to their mission.

Barrak Alzaid: I just wanted to talk about your journey as the founder of Considered Capital and the way that your platform gives mission-driven organizations and businesses the tools they need to raise alternative funding. Obviously, our audiences are at very early stages of their journey, and I know that you have plenty of insights to share both from your personal experience and also from how you developed Considered Capital. So I was wondering if you could just give us some background to your own journey

Esme Verity: I am an entrepreneur through and through.

I have started and sometimes finished several different businesses. My first business was making handmade jewelry and selling it at my mum's jewelry stand in Portobello in London. So we started young, but I suppose my experience or my arrival at where I'm at now was really … it was quite a journey from understanding, actually what did I want to achieve through entrepreneurship. And for me, I didn’t want to make a lot of money for myself. It was how can we create generational wealth or how can we redistribute wealth in a meaningful way? And how can we use entrepreneurship in a purposeful way? How can we really be solving these big problems that governments are not and corporations are creating, but using business rather than using sort of charity and redefine what impact looks like. How can we hold those things, like make money, redistribute it, but also create impact. And can we do those two things? Was really the questions I was holding for a long time. And for a long time, I thought I was really just like, I thought I was insane. I thought I was the only one who really was trying to hold these two things. People being like, we create loads of impact, can create loads of money, business is business and you've got charities, don't try and hold these two things in the middle. And then I came across a manifesto, a friend actually sent it to me, a manifesto by an organization called Zebra's Unite. And their tagline was, “Zebra's fix what Unicorns break.”

And I read that and I thought, yes, you know what, I am not alone. This is exactly what I have been looking for. I'm not trying to build a unicorn. I'm trying to build something that's real. A unicorn is mythical, but a zebra is real. A zebra balances purpose and profit. are black and white. They are not trying to be extractive. They're trying to bring value to all of their community, not just a small number of people who make money.

They're probably not trying to be, you know, go down the VC route. They're trying to look for something different, different types of funding, maybe look for some exit upon them or allow them to have flexibility. Maybe buy back their shares, all sorts of different options, be a cooperative, be steward owned, all of these interesting options that should be open to people. And I was like, right, great. Now, how, how do I do this? How would somebody build a zebra if I wanted to meaningfully bring my employees into this business and perhaps they would buy this business, how would I do that? How would I fund that? And that was part the part to Considered Capital and giving you options. If you want something that looks different, how do you do that in a meaningfully practical way that is as simple and fast as we can do.

Barrak Alzaid: And you're trying to catch entrepreneurs very early on in their career, right? So what are the kinds of mindset shifts or what are the kinds of expectations that are instilled in entrepreneurs and how are you helping to reorient them and kind of change the narrative?

Esme Verity: I think there's a few myths we have to bust and the biggest one that I find is this allure of venture capital. You read the headlines, you see somebody's raised millions of pounds in venture capital, 100 million here, 5 million here. You think, great, I could, I'm really struggling. I'm right at the beginning. I would love to hire somebody. I have to just be able to pay myself. I'd love to be able to, you know, not feel so panicked all the time.

So they chase this money that they've seen the headlines, but it's really for a very specific type of business. It's not for everybody. 99 % of businesses won't raise VC and shouldn't raise VC. but people think that alternatives is somehow worse. Like you've somehow failed. Like, I can't raise VC. So maybe I'll go and, you know, do something else. Well, no, it's a ... any type of journey is a success if you know what success looks like for you. Success shouldn't be, I've raised a hundred million from venture capitalists because that money is going to take you on a certain journey and it might not be right for you. So take a step back. That's why try and get people really early. Take a step back and be like, what do I want? What is my mission here? Do I want to sell my business? Do I not? How important is my purpose and my impact? Is it built into my impact model? Because if it is, this type of–my journey might not be right for me. So that idea of purpose, identifying purpose, and also defining and redefining success for oneself as an entrepreneur is, I think, universal, regardless of your starting an e-commerce business in your home office, or maybe your, you know, nine-to-five job, while you're dreaming of that business.

Or if you're in big tech and you're trying to pursue a big scalable model. And I'm wondering, what advice do you have for entrepreneurs as far as identifying and sticking with that purpose? And how would you encourage people to reconsider what success means for them?

I find the majority of entrepreneurs are purpose-driven in some way, because I think you have to, your end goal cannot be, maybe you want to make a lot of money, you have to be more than that. And purpose can be very different things for different people. You could be trying to create social and environmental impact, but you could be actually just trying to make a business that pays people well, or treats them well. And for that, you need to have decent profit margins to be able to actually offer that.

I think impact and purpose can be very wide. It doesn't need to be like, you're trying to save the world, right? You're trying to offer a decent product to perhaps an underserved market. But be really, really clear for you what that purpose is and what those guardrails are, because you're going to be pushed and you're going to be pressured into perhaps making compromises on that impact. the faster you grow, the bigger you grow when you bring in external investors or shareholders.

That's when it starts getting more and more challenging for lots of entrepreneurs actually about putting in a governance structure or legal structure that protects against mission drift. You can do that in several ways, but, or some sort of mission lock, which is basically telling investors my purpose and my impact is equally important as shareholder value and making sure that I'm providing returns and you will get investors that want you to create impact and value that impact. And in fact, we'll ask for mission lock, will ask for some sort of thing because everyone is fallible as a founder, might, you know, Amazon might come along with a nice little deal and you could be like, you know what? It's difficult to say no. So you like protections in place for everybody because your business is not just for you. It's for the people that work there and for the people that benefit.

Barrak Alzaid: Some of the alternatives to funding methods that you work with and are proponent of include community ownership, revenue-based financing, or cooperative models, How would you advise new business owners or emerging entrepreneurs to take some initial steps in exploring alternative funding models like these. How can they explore these options and determine if they're right for their business?

Esme Verity: There's a few ways to think, like, to start with, it's been sitting down with your co-founder, if you have one, on your own, with a friend, somebody that you need to have a conversation with and be like, right, what am I trying to do here? Without thinking about how you might fund it, what legal structure you might need, what are you trying to do here?

What's your mission? What's your end goal? Do you want to exit? Do you want to sell to your employees? You don't have to do it now. You don't have to it in five years. There's some idea of what the end goal is here so you can work towards it. And then you go, you know what? In three years time, I would like to be steward owner. So you like to, in a meaningful way, protect your mission. And you have a clear idea. Then you can start thinking about, what are the things I need to do? Maybe I need to think about, let's go talk to some people that haven't done this before. Let's speak to a bunch of founders.

And you can get a very good idea early on if an investor is open to what you want versus what they're interested in. You get these investors that are much more open -minded.

And I'm much more focused on what is the best thing for this business and what's the best thing for this founder. Not, okay, this is the way that I've normally done it. I have to do it this way. You have to be so careful with who you invite into your business, just like you would if you get married, right? It's the same thing. Yeah. And it really seems like it comes down to building trust and having meaningful conversations with yourself, with your, partners and team members and, with the people who are carrying the bags of money, essentially.

Barrak Alzaid: Just to wrap up, I have one last question for you. At Digital Entrepreneur, we're big on reconnecting entrepreneurs with the joy of business. When things get hard, what helps you get back to feeling joy in both life and business?

Esme Verity: I love that question. Yeah, certainly, certainly struggle with that because it's hard for everyone, no matter what stage you're at, no matter what you've done, who you're at. And I'm a solo founder.

So there's also that additional level of, you know, I'm alone and the buck stops with me. so I've realized a few things that I need to do when I feel like I'm in that place. And for me, it's thinking about who am I helping? Who have I helped with the things that I've done? And I have this document, it's my joy document, and it's got like little. It's got sort of like snapshots of emails people have sent me when they're gone, you know what, I've just like, without you in this course, I would have given up. Or like, I've just raised an interest-free loan. I didn't know about it until you showed me. Like this journey is really hard, but you've shown me that it is possible because I've been introduced to other people who are like me and now I'm not alone. And you just, a really couple of those and you're like, you what, this is worth it because I, even if it's just those people that I've moved slightly in a more positive direction, then that is what we're really here for.

Barrak Alzaid: We all need a joy journal like that. Thank you so much for that reminder, Esme.