funding models

5 Funding Models for Your Kingdom Startup

by Mike Baer

Post first published on the Third Path Blog, reposted with kind permission.

The still famous line from the movie Jerry McGuire is “Show me the money!” Some of you have been thinking that as you’ve read the rest of this series. How do I get money to launch my startup? I’m going to outline several “programs” you can consider:

The “Missionary for a Moment” Model

I have to tell you upfront that I have rejected this model for years. However, recently a close brother whom I respect greatly challenged my thinking and got me a little closer to acceptance than I was before.

The Momentary Missionary Model essentially uses raised donations or support to cover living, travel and certain startup expenses just like a normal missionary would raise support to cover living, travel and ministry expenses. What makes this work is that you are committing to your “donor-investors” to be off their giving roles within a specified period of time, to have your business profitable and to live off it.

Your donor audience in this scenario is sympathetic although they may not be the most investment savvy. Be careful to not take unintentional advantage of that sympathy. This is business.

The “What’s Your Day Job” Model

The majority of small businesses start this way–sometimes coupled with the next program. In this model, you and/or your spouse have a normal “day job” that you live off of while you are in the process of planning, launching and self-funding your new Kingdom Business.

The great advantage of this approach is that you aren’t betting the farm. The great disadvantage is that you aren’t betting the farm. You run the risk of ending up with a struggling “hobby” business instead of a real one and never finding the courage to go ahead and jump in with both feet.

The “Bootstrap” Model

If you read enough back issues of Inc. or Entrepreneur you will repeatedly come across the guy who exhausted his savings, maxed out his credit cards, and mortgaged his house to find enough money to launch a business and keep it afloat until the economic engine could kick in.

This is the riskiest of all methods but, in some ways, also the most rewarding. You make it or you don’t. You win or you lose. And only you are left holding the bag. One of my BAM heroes started his company in China with $14,000 to his name; it went on to be a smash success.

The “Friends and Family” Plan

Mobile phone companies are not the only ones who can use this term. Plenty of entrepreneurs have started the same way. They may choose to invest (for equity), donate the money (not a bad way for Mom and Dad to share their inheritance with you tax free while they are still alive), or make a series of loans.

I think this is the easiest way to raise money (and we probably aren’t talking millions!). It’s also fraught with some real problems–do they want a level of control? Will they be injecting their advice? What happens when you owe friends and family money? What happens if the business fails and you still owe your friends and family money?

The “Angel or Venture Capital” Plan

To date there are very few capital funds willing to invest in Kingdom Business outside of the Western world. If you are launching a company in Toronto or Terra Haute, that is one thing and you may find funding for equity (and control) relatively easily. However, funding of this type where the investor expects a return on his or her investment is extremely hard to come by for opening a company in Bandung or Beijing. The risks are huge and there are virtually no track records of success; these two factors make true investors very nervous.

Conclusion

If you’re thinking this is hard, then you are right. It is. However, at the same time don’t forget that God is able to provide abundantly for any work that is of His initiation and for His exaltation. After all, the “cattle on a thousand hills are” His – He may just decide to sell a few and send the money to you!

mike profile

Mike Baer was one of the early leaders in the modern Business as Mission movement. He started his career as a pastor and church planter. After 15 years in the pastorate Mike was led into business where he gradually began to discover the potential for believers in business to bless their communities, evangelize the lost and spread the Kingdom of God, especially among the unreached. Today, Mike is the Chief People Officer of EmployBridge, a $3.2 billion employment company based in the US. He has written 3 books on BAM: Business as Mission, Kingdom Worker, and Gospel Entrepreneur. Mike is a regular contributor to the Third Path Blog. Today Mike and his wife reside in the mountains of North Carolina where they enjoy their 5 grandchildren.