Investment in BAM: How to Get the Funds Flowing
When we asked veteran BAM leaders to identify some of the pressing issues that are facing the business as mission movement in the next decade, among the issues they identified were several areas that could broadly be categorized as ‘resource gaps for BAM companies’. These described a lack of the kinds of resources and inputs that BAM practitioners, and the enterprises they run, need to increase their chances of long-term viability and health. These resource gaps included:
1. Adequate financial capital flow.
2. Adequate human capital flow – both in terms of a) recruiting the right kind of people to begin and sustain a BAM company, and b) succession planning and the successful transition of a BAM company from one generation of owners to another.
3. Adequate support for BAM practitioners, especially mentoring, accountability and care.
We will be posting articles covering each of these issues during the month of June, beginning with the challenge of financial capital flow.
Financial Capital Flow – Where’s the block?
Two main issues were identified within the issue of financial capital flow:
1. A lack of investors ready to finance BAM companies
2. A lack of investable BAM businesses, or ‘deal flow’
What was agreed is that adequately financing BAM is an issue that must be addressed for the future, and to address it we are likely to need to work on both ends of this flow.
Increasing the Financial Capital Available to BAM Companies
There is no doubt about it, if the BAM movement is to grow and have the impact that we hope and expect in the future, then a growing number of investors will be needed in the BAM ecosystem. We need more of all types of funds, and models of funding, these will include funding sources available for startups as well as growth capital.
While some feel there is plenty of money in evangelical circles, one major need is for a greater number of Christian investors to understand and get behind the BAM paradigm. This will involve funders being more patient for financial returns (which are crucial) in order to be able to also include spiritual, social and environmental returns within their metric of success.
A challenge for BAM investment lies in the inherent risk that starting a business as mission company involves. Business startups have a high rate of failure in any case, and many BAM practitioners are starting and growing companies in areas of the world that are hostile to both business and mission. BAM investors, particularly in startups, must have a high appetite for risk and be willing to prioritise BAM goals alongside realistic business targets. The BAM movement requires a multiplication of investors and funds that are motivated to finance companies that are focused on reaching unreached peoples and providing jobs and economic benefits for the most vulnerable and marginalised.
We must address the fact that BAM has a Kingdom motivation which doesn’t always follow the logic of the world. This will impact investor, practitioner, sender, and receiver expectations and have implications for capitalising the movement, especially if/when suffering and loss comes. – Peter Shaukat, Transformational SME
Another challenge is to shift the mindset within the Christian church that mission funding can mean only donations. As important as mission giving is, we also need other kinds of funding models and a growing number of individuals and groups motivated to reach missional goals through non-traditional means of funding, such as investment in BAM companies.
We have a funding bottleneck. There is no lack of evangelical funds available on the sidelines; but start up capital and even mezzanine capital is hard to come by. Evangelical giving habits are too defined by government charity incentives; ‘aid not trade’ dominates current thinking; and Christians in most respects use the same standards as those of the world. All of this needs to be challenged and reversed. – Larry Sharp, IBEC Ventures
Helping BAM Companies Become More Investable
On the other hand, we need a growing number of BAM enterprises that are worthy of investment. Training and coaching for BAM practitioners will help them prepare for investment – and this should result in more efficient ‘deal flow’, as well as increasing the overall probability of business success. As the BAM Global Think Tank report on Funding puts it:
An area of need is for more investment-worthy companies. The continued development of excellence in business approaches will increase the potential for profitability and enhance attractiveness to potential investors. Alongside this, the nonnegotiable principles of integrity in identity and practice, integration of work and ministry, and intentionality of Kingdom purpose will be crucial to successfully move enterprises from startup to sustainability.
Getting the Funds Flowing
The recommendations for the BAM movement from the report on BAM Funding are worth repeating here:
There is first of all a need for better communication between capital sources as well as between these investors and BAM practitioners. Without this improvement, BAM will suffer from confusion and inefficiency, limiting its effectiveness and stalling growth of viable, sustainable enterprises.
Secondly, over the next few years, there is an opportunity and need to replicate successful funding models. With the strengthening of the BAM funding market, scaling it to respond effectively through multiplying the number of BAM initiatives will be an important challenge. In turn, this is predicated upon Christians everywhere understanding their investment decisions are an essential element of the holistic practice of discipleship.
Thirdly, the way to nurture this paradigm shift in investing is to initiate dialogue around the theology of wealth and investing. Developing an archetype rooted in Scripture that integrates missional competence with commercial proficiency is essential to the shaping of expectations, motivation and furthering of the BAM movement.
In conclusion, investment in the BAM ecosystem needs to be more effectively joined up and effort needs to be made to multiply effective models. We need Christians with expertise in capital investments and business incubation to come alongside BAM leaders and practitioners to help us scale and multiply funding entities that have the benefit of learning lesson and fruitful practices from the pioneer generation. This activity should be strengthened by robust theological framework that underpins BAM funding.
Read more on this topic:
Current models and challenges for BAM funding:
- BAM Think Tank Report on Funding: No Water, No Fish – Funding is Vital to Business as Mission Success and Sustainability
- Do Economic Incentives Matter? A Nosey Economist on BAM Financing – Dr. Steve Rundle
- 5 Funding Models for your Kingdom Startup – Mike Baer
Advice for BAM practitioners on becoming investment-ready:
- 8 Unexpected Questions from BAM Investors – Patrick Lai
- Ask a BAM Mentor: Financing a BAM Company – Panel of BAM Mentors
General financing advice for BAM practitioners:
This post is part of a series of blogs in June 2019 looking at resource gaps in the BAM ecosystem that we must address for the next decade of business as mission to be more fruitful.
The BAM 2.0 Series
In recent months we have been exploring each of the key issues highlighted in our introduction post on 10 pressing issues to address for BAM 2.0.
In March we continued with our introduction to the series, looking at how far we’ve come and some of our ‘big hairy audacious goals’ for the future.
In April we took a deep dive into our ‘Why’ – what are some of the pressing global issues that BAM can address, including poverty, unreached peoples, the refugee crisis and human trafficking.
In May we looked at some limiting issues such as the sacred-secular divide, our definition of success, our geographical depth and our connectedness; issues that we must overcome for future growth.
In June we’ll look at resource gaps to overcome, including human capital, financial capital, mentoring and support, prayer and continuity planning.
We hope you enjoy this series! Follow us by subscribing to The BAM Review email or on Facebook, Twitter or Instagram.
Blog compiled by Jo Plummer