Karma Capital – founded by multi-millionaire who gave away 90% of his money – wants to upend 'toxic' VC model

The story of Karma Capital begins with four college students who wanted to read faster. Their solution was Blinkist, an app that turned dense textbooks into bite-sized summaries. It caught on quickly, and in 2023 Blinkist was acquired in a deal reportedly worth around $100m. The founders became multi-millionaires overnight.

One of them, Sebastian Klein, who left Blinkist in 2016 but remained a co-owner, made over €5m in the deal. Then, he parted with 90% of his fortune, keeping just €500,000 for himself.

“Money can be like poison,” Klein said recently in an interview with German newspaper Taz. “It can destroy relationships, lead to abuse of power, and fuel a dynamic that destroys society and nature. Excessive wealth is one of the greatest dangers of our time.”

Klein directed most of his former wealth into a new experiment in finance: Karma Capital. Co-founded with his brother Nicholas Klein and former Deutsche Bank executive Theresa Böttger, the Berlin-based fund wants to rewrite the rules of venture capital.

A new VC model?

Instead of chasing quick exits and hockey-stick returns, Böttger says Karma is the first VC dedicated solely to backing companies structured under “steward ownership.” These are businesses that essentially own themselves, keep decision-making with employees, and reinvest profits in their mission.

“Steward ownership is one big tool to help us break up the gap between the very rich and the very poor and make our economy more inclusive,” Böttger tells Impact Loop.

Patagonia is probably the most well-known steward-owned company globally. However, according to Böttger, there are over 200, lesser-known companies with this governance structure in Germany alone – and Karma has already backed some of them.

“We saw that there is a big demand from founders for alternative models, especially finance models that are not exit-driven or exit-focused,” says Böttger.

In Karma’s portfolio are impact startups including Vlyd, which makes tampons from seaweed, and Proservation, which makes packaging from spent grain husks. Karma also backs media companies such as Flip, a publication focused on exposing corporate greenwashing.

Raising first fund

Now Karma is raising its first fund, which has a target size of €8-10m and aims to close by the end of the year.

The fund will only invest in companies that are steward-owned or looking for financing to transition to a steward-owned business model.

Böttger acknowledges that limits the scope a bit, but she argues that precisely for that reason, it’s the fund they need to build.

“The classic VC structure encourages companies to grow quickly and beyond planetary boundaries, it can be very toxic and extractive,” she says. “We want to break the mould and encourage more companies that put impact beyond profit.”

Böttger says the firm has backing from Ecosia, the tree-planting web browser, but declined to comment on whether Ecosia will invest in Karma’s new fund.