Capital on Your Terms: Why Smart Founders Reject Catch-All VC
How impact entrepreneurs align capital with mission while maintaining control
Key Takeaways
- Impact entrepreneurs often need “purpose-suited capital” that aligns with their specific growth trajectory and mission, not just the standard venture capital (VC) model
- Founders are embracing alternatives like revenue-based financing, redeemable equity, and recoverable grants to maintain ownership and mission control
- Social capital (networks and connections) serves as the critical foundation for accessing financial capital, emphasizing why community-building matters
- Digital tools like Capital Explorer now empower founders to assess which funding instruments best match their business model and impact goals
- Forward-thinking founders recognize their power in funding relationships and actively seek investors aligned with their values and timeline
A SXSW fireside chat with funding experts Maria Pope from Carta and Allie Burns from Village Capital explored the limitations of traditional venture capital and highlighted innovative funding approaches better suited to impact-driven companies.
- Breaking the VC Mold
- Founders Embrace Purpose-Suited Capital
- Communities Drive Funding Access
- Social Capital Creates Financial Opportunities
- Entrepreneurs Access New Tools and Resources
- Founders Reclaim Power in Funding Relationships
- Learn More
Breaking the VC Mold
This wasn’t an “anti-VC” discussion, but rather a recognition that different businesses require different capital approaches. Maria Pope explained, “There are a lot of ways that a business throughout their life cycle will take on many different forms of capital…maybe you don’t take venture at the beginning, but you might do some growth equity towards the end of your life cycle.”
Allie Burns highlighted the particular challenge for mission-driven founders: “Taking venture capital and sort of being tied to those return expectations can often push you away from your mission.”
Multiple attendees concurred, describing how traditional investors often force companies into rigid scaling models regardless of fit and impose a standard “playbook” seeking rapid growth regardless of sustainability.
Founders Embrace Purpose-Suited Capital
Village Capital has pioneered the concept of “purpose-suited capital” — funding approaches that align with a company’s specific needs, timeline, and impact goals. Their Capital Explorer tool helps entrepreneurs navigate different financing instruments beyond traditional equity.
Laurie Felker Jones, who helped develop the tool, described herself as “a financing doula,” teaching founders to “understand what the business model for the capital allocators is in the room, and that you can do different kinds of things.”
Entrepreneurs are increasingly utilizing several alternative mechanisms:
- Revenue-based financing: Companies repay investors through revenue shares rather than equity
- Redeemable equity: Founders maintain paths to buy back shares over time
- Recoverable grants: Organizations provide non-dilutive funding that requires repayment only when companies hit specific milestones
- Self-liquidating investments: Investors receive returns without requiring a traditional exit
Burns shared a compelling success story about a that went through Village Capital’s program and determined that they were not ready to give up ownership. “Retaining ownership was really, really important to them at the stage of the business that they were and the type of impact that they were trying to have. And so they negotiated with the investor to build out a recoverable grant, a non-dilutive structure that required them to give up zero ownership, but still allowed the investor to get capital back.”
Communities Drive Funding Access
The speakers emphasized how entrepreneur support organizations (ESOs) actively build capacity for impact founders. Village Capital’s multifaceted approach includes:
- Investment readiness programs featuring an innovative peer selection model
- Support networks for local ecosystem builders through “accelerator for accelerator” programs
- Digital tools that democratize access to funding knowledge
An Epicenter Memphis representative from the audience shared how their “entrepreneurship fellowship” innovation developed with SBA funding gave $65,000 to selected founders who lacked friends-and-family funding. One recipient, who faced traditional funding barriers, leveraged the fellowship to secure a $600,000 pre-seed round.
Social Capital Creates Financial Opportunities
The panel repeatedly stressed that social capital — networks and connections — drives financial access. For underrepresented founders particularly, finding the right community proves essential.
Pope noted, “Social capital is certainly a barrier. And I think, you know, Village Capital, Carta, I think we all have a different role to play in the ecosystem. But I think what all of us do, hopefully, well, is to be conveners.”
Burns identified another critical barrier in impact investing: “One of the barriers that we often see for impact-driven entrepreneurs is that there are a lot of investors who do not have proximity to the problem that the entrepreneur is trying to solve.”
Founders Fight Dilution and Plan Strategic Exits
Carta’s research reveals a stark reality: by Series D, founders typically retain just 11.5% ownership, highlighting how traditional funding paths severely dilute founder control.
Pope explained how Carta empowers founders with strategic data: “You can go in [our most recent founder ownership report] and actually understand where your funding stage is at and your industry, and be able to get more specific data. So that way, when you go to those funding conversations, you can be equipped with the actual information to negotiate.”
The discussion also highlighted innovative exit strategies beyond standard acquisitions or IPOs. Jenny Everett introduced perpetual purpose trusts, which allow owners to “put their company into a trust structure and designate the purpose of that company in perpetuity.” This approach, famously implemented by Patagonia, preserves the company’s mission regardless of ownership changes.
Entrepreneurs Access New Tools and Resources
Speakers highlighted several practical resources entrepreneurs now leverage from diagnostic tools to AI-assisted research for prospect identification to alternative entity structures formalize impact orientation like B Corps and Public Benefit Corporations.
Burns also pointed out untapped funding sources: “There’s a lot of capital, a ton of capital sitting in donor advised funds…Donor advised funds can also invest in for-profit entities, and that’s capital that’s already been taxed advantage, that is sitting there waiting to be deployed.”
Founders Reclaim Power in Funding Relationships
The session concluded with insights on changing power dynamics. Burns emphasized a critical mindset shift: “It’s very easy in the fundraising process…to forget that you have power. It’s very easy to go into a room with an investor and be like, ‘Oh, I really need that capital because my runway is looking really scary.’ But you do have power.”
This perspective represents an important evolution in how founders — particularly from underrepresented backgrounds or leading impact-focused companies — approach fundraising with confidence and clarity about their capital needs.
Learn More
Listen to the full conversation:
Highlighted Speakers and Organizations:
- Maria Pope, Head of Community at Carta, a fintech company developing infrastructure for private markets.
- Allie Burns, CEO of Village Capital, an organization committed to unlocking capital for impact-creating startups
- Laurie Felker Jones, Senior Advisor, Capital Strategist for Profit & Purpose
- Jenny Everett, Board Member at Village Capital and Co-Founder of Purpose Trust Ownership Network
- Epicenter Memphis, which exists to ensure that founders of innovative businesses have what they need to develop, launch and grow their ventures in the Greater Memphis region
Explore Village Capital’s Capital Explorer tool:
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