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The Need for Christian Capital Sources- A Call to Action

By BLDNG THE WALL BLOG - Raising capital for a business can be one of the most (if not THE most) challenging aspect of being an entrepreneur. Especially so for Christian entrepreneurs. The shortage of Christian capital sources makes it a seemingly insurmountable task for Christian startups. Christian startups have fundamentally different goals, needs, marketing and exit strategies than traditional "for-profit" businesses. As a result they need capital sources that understand this, so that the Christian entrepreneur does not have to sacrifice the god-given mission and impetus behind the forming of the business, in order to maximize the ROI for the capital source.

Almost 22 million businesses were started in the U.S. in 2007, according to the SBA's statistics. Out of those, only an estimated 637,000 businesses (2.89%) are "employer firms". Which in plain English means that they have at least one employee other than the owner. The vast majority of new businesses are based out of the home, always with the hope that someday they will break free of the nest and grow into something bigger.

Christian start-ups make up only a fraction of the millions of new businesses opened each year. We have no way of knowing what those exact numbers are, since the US Census does not track Christian businesses, but the potential is very large. Lets extrapolate some numbers based on recent studies. According to the American Religious Identity Survey (ARIS) conducted by the City University of NY, Christians make up 76.5% of the population. Obviously, not all who profess to be Christians are practicing their faith, but this large number points out the potential number of Christian start-ups. According to research from the Barna Group, "15% of those who regularly attend a Christian church ranked their relationship with God as the top priority in their life". If we expect these percentages to hold true for business start-ups as they do for the general population, 16,830,000 of start-ups would be started by a Christian entrepreneur, of those 2,524,500 would be businesses that are operated with Kingdom values and goals (see Christian Capitalism). Which would mean that 72,958 of those would fit in the category of Christian employer firms (having more than one employee), that would need a larger amount of start-up capital. This shows that although the greater need seems to be that of micro loans for smaller Christian start-ups, there is also a pressing need for more, than the handful of existing, Christian capital sources.
Control over the ability to operate the business as a ministry, the validity of making God-guided business decisions, and the probable dilution of the God-given mission, are major obstacles to overcome when seeking capital and resources from secular sources. The exit strategy can be another possible sticking point, if the existing exit strategy is to "continue until God says to do otherwise". Try explaining that to a secular VC! Can a company truly be a Christian company when it brings in a secular partner, raises capital through a secular source such as a Venture Capital firm, or when it goes public?
“No servant can serve two masters; for either he will hate the one and love the other, or else he will be loyal to one and despise the other. You cannot serve God and mammon” (Luke 16:13)
In my opinion when a company gives up any amount of control to outside secular capital sources, it gives up the ability to follow God's will without compromise. To some Christian companies especially those closer to the secular social entrepreneurship end of the spectrum, this may not be as important, but for those who are practicing Business as Mission, serving Christians exclusively, or operating their businesses as a ministry this would be a deal breaker. God's way is to plant his resources where they can do the most good. Secular businesses invest their capital where it can bring the biggest return on investment. A Christian business may invest in ventures that may not maximize its return on investment, but may provide a good balance of capital return and social good. Secular corporations though, are accountable to their board of directors (BOD), and ultimately shareholders who elect the BOD, and have invested in the corporation for one reason and one reason alone, and that is to make as much money as possible. This highlights the huge need for Christian capital sources. Christian businesses need capital resources such as Venture Capital, Hedge funds, Mutual Funds, and others, that are focused on, and understand their specific needs. 2Corinthians 6:14-16 says "do not be yoked together with unbelievers...". It is of utmost importance that Christian companies be owned by shareholders with Kingdom goals and values, in order that Christian start-ups may form, blossom and become companies that are capable of redefining the business landscape and can accomplish their Godly missions. I believe that as this Christian capital infrastructure grows, we will see an explosion of Christian entrepreneurship and a great movement of God in the business world (see reclaiming the 7 mountains).

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posted by Justin Forman | 4.17.2009 - 8:06 AM

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