Aligning on capital

Capital that serves the purpose and value creation process

The Breathe Approach for companies is designed to maximise their ability to successfully fulfil their Purpose in the most efficient and effective manner whilst serving the needs of all stakeholders, including the people within the organisation

At Breathe, we are building inspired companies. Inspired companies are resolute on fulfilling their purpose, serving their stakeholders, and demonstrating a way forward for the business community as a whole. Without fruitfully collaborating with aligned investors, Breathe‘s purpose will not be served.

Investors play an important role in allocating capital towards the most productive enterprises in society at large. After allocating capital, investors have a crucial role in monitoring companies and engaging in ways that promote their success. Without active monitoring and engagement, the hazard remains that companies become complacent or mismanage the enterprise's resources.

Yet, investors are more than stewards of financial capital. Companies do not merely thrive on the basis of financial health alone. They are equally reliant on various types' sustained value of societal and planetary capital. Consequently, investors must think broadly about the consequences of their enterprise's activities to ensure their sustained success. We see this as an inherent responsibility of stewarding the productive resources of our society. As much as it is a responsibility, it is equally an amazing opportunity – the opportunity to create the world we ourselves would like to live in and the world we would be proud to hand over to our children.

The successful collaboration with investors is one of the most crucial and most tricky puzzle pieces of the Breathe approach. At Breathe, we recognise the important role of investors and we are relentless in making our investors successful. Yet, the success of our investors is but one piece of the puzzle. In our approach, we strive for mutual prosperity for all stakeholders.

Our governance model sets out to create the right context for investors to fulfil their role of representing financial capital. This entails stewarding the company towards long-term prosperity in the interdependent network of stakeholders in which the company operates. Recognising an enterprise‘s dependence on key stakeholders, our model integrates these stakeholders such that they become co-stewards of the company together with investors. We do this by transitioning the voting rights of the company to a foundation where investors and other key stakeholders are represented as the board of the company. The board then collaborates to make decisions that maximise the chance of the long term success of the company and the fulfilment of its purpose.

To make this governance setup work we, have integrated two crucial considerations into the design of the governance process at the level of the board. First, we have preserved necessary investor rights and protections. Second, while we bring more divergent interests and viewpoints to the table, we have instantiated a decision-making process that avoids consensus-seeking and gridlock in decision making. You can read more about the governance model on the approach to the governance page.

The governance process is designed to help companies chart a course that, in the long run, optimally serves its purpose and stakeholders, including financial stakeholders. If we broaden our value definition further to encompass more than shareholder value alone, a company governed in this way should perform superiorly, all the while remaining financially attractive to investors.

Importantly, Breathe works with a diversity of aligned investors. Because our investors have different objectives, what constitutes a successful collaboration varies. Understanding our investors' needs and pairing investors with opportunities that can fulfil those needs is a crucial aspect of Breathe's approach to capital. For some investors, this means minimising risk, for others, it means favourable expected financial returns. Some investors partner with us to make ground shaking positive changes to a chosen sector through establishing a keystone player that unlocks value-creating opportunities for a whole business ecosystem. Others still venture to tackle a societal issue that has for them personal significance.

In every case, our investors believe in the entrepreneurial power of the purposeful commercial enterprise. We believe in business' potential as a force for good and we are willing to lead by way of example.

To read more about the other four components of the Breathe Approach – Purpose, Structure, Governance and Culture – have a look over here.