Dan Miller is the Founder and CEO of Steward, a lending platform for regenerative agriculture. Dan is also the Co-Founder of Fundrise.
People often ask me for advice about how to raise money for their business. I have raised capital for my own companies, first as co-founder of Fundrise and now as founder & CEO of Steward, and each of those enterprises was a first-of-its-kind fundraising platform. Through experience over hundreds of deals, I’ve encountered nearly all types of capital in a quixotic pursuit of commercial funding that is values-aligned, patient and flexible. These attributes are not generally associated with investment capital, so the search has been exhaustive.
Rethink capital resources.
Most people strive towards venture capital and private equity when raising money for a growing business. Unfortunately, it’s misaligned for the vast majority because of liquidity and return requirements.
To understand the structural nature of the misalignment, it’s important to know that the overwhelming majority of the capital invested by private funds is not that of its principals, who typically put up just a few percent of the fund capital. Therefore, the majority of the capital does not belong to them. This creates distortions.
One limitation is liquidity: a fund must return capital to investors by a certain date, so instead of fitting into a company’s natural timeline, the capital sets the timeline. Now business planning is being influenced by money rather than the reverse.
Another issue is the singular focus on high returns: if returns are the driver of performance and compensation, outcomes will be return-oriented. As capital passes through multiple hands, from pensioner to pension advisor to fund manager to operating business, it’s hard to impart any values other than return to the capital since the values for each person in the supply chain are different. Through this process, capital becomes commoditized, removing nuance so it can be measured by a single variable: return.
The exclusive focus on return is combined with intermediaries who take fees along the way—notoriously excessive in the financial sector—leading to a cost of capital to the operating business, which is difficult to sustain (15%-20% annualized expected return) when the person whose capital it is only gets a net 6%-8% return. That significant spread is extracted by the intermediaries who strip the capital of its uniqueness and preclude the possibility of a fair cost.
Venture capital and private equity requirements create a conundrum: how can you achieve outsized returns and a sizable liquidity event without compromising the stability and values of the company? How can you promise extractive growth rates without becoming extractive yourself? Only businesses that intend to scale quickly and sell themselves or IPO fit the bill for this type of investment capital—which should be the exception, not the rule.
As I began my first business venture, I could not find flexible, patient values-aligned capital that cared about return while understanding that other qualitative attributes matter. This initially began from a real estate perspective, with a desire to develop neighborhood-scale commercial buildings with a focus on local tenancy and aesthetic design. Instead, investment funds wanted a national credit tenant and the lowest feasible construction costs to maximize profit, with the goal to sell the property within 5-7 years to reap a windfall and move forward.
Consider direct fundraising.
Rather than raising money from these investment funds, I wondered if it was possible to raise money directly from people with a personal interest in and tangible connection to the project.
To understand why such a simple premise is exceedingly rare, one needs a primer on financial regulation, beginning with the Securities Exchange Acts 1933 & 1934. The legislation and its implementation have created a system with enormous costs to be a public company. This keeps most companies private—currently more than 99%. For private companies, it is time-consuming and expensive to raise capital from broad groups of investors through marketed offerings. For example, of the $4 trillion raised through exempt private offerings in 2024, less than $2 billion (or 0.05%) were broadly marketed offerings available to non-accredited investors. Due to regulation and market norms, private companies are pushed to raise money in private offerings to professional investment funds. Though efficient from a cost and regulatory perspective, it limits companies to a small investor pool that is return-driven and less likely to be aligned with the mission and values of a business.
Navigate regulatory challenges creatively.
Finding new fundraising paths through the mastery of arcane financial regulations was the crux of each business that I founded. How can a private company, such as a neighborhood-scale real estate project or a regenerative farm, raise money from people, both accredited and non-accredited, who simply care about its work? From Regulation A to the Reves Test, I have worked to re-envision existing regulatory frameworks in novel ways to facilitate direct, broad-based fundraising.
Build relationships.
The key thing I learned in raising money directly from people who share your values is that it’s a fundamentally different type of investor. When it’s a person’s own discretionary capital, the interpersonal link creates a commitment to the business that is deeper than return-driven investment funds. Those relationships provide more resiliency, such as when recapitalizing a business in a challenging market when traditional capital disappears or becomes prohibitively expensive. Capital that is more accommodating and aligned with the goals of the business will be supportive instead of obstinate when you arrive at a critical juncture.
Focus on slow and steady growth.
So when I am asked about where and how to raise money, instead of pointing towards esteemed venture capital or private equity funds, I suggest raising money from values-aligned individuals—people you know, people who live nearby, people who love your service or product, and people who believe in your leadership and mission. These relationships, when nurtured, will develop a unique customer and investor experience that generates referrals and, ultimately, may generate more capital. When people believe in a project and its purpose, they want to be involved. That slow and steady development of a resilient, distributed network will set a foundation for success, and even if it requires more time and effort, it will be more personally rewarding.
The information provided here is not investment, tax, or financial advice. You should consult with a licensed professional for advice concerning your specific situation.
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