In the Abundance of Problems Lies Opportunity
Image by Reuben Teo
By Mike Sharrow
I’ll never forget one of the most haunting phone calls I received while a C12 Chair in 2013. Sitting at my desk in San Antonio I answered the phone for a call from Austin. The caller was a manager in an Austin-based company, whose former CEO was a C12 member. The CEO had successfully sold the company recently. The leader said, “You know, all that Christian business stuff is a bunch of bologna (or something like that)! I always wondered if it was true.” Shocked by the random assault, I asked what he was talking about. “Oh, our former owner was always talking about how he was a ‘steward’ and this business actually belonged to God along with everything else in his life and that he viewed us as special, even called it a ‘ministry’ and would pray about things, and all that jazz. That was all fine until he got the exit he wanted. Then we were just an asset and sold to the highest bidder. He got his money and disappeared. Now it’s business as usual. I think all that religious talk was just nice words to make him feel less guilty about making himself wealthy through the business!”
Ugh. I hated what I heard this man interpreting from the chain of events. I was grieved knowing that if the former owner heard those words he’d be nauseated himself. That was not the vision in the deal!
Not too long later it happened again. A “successful exit” by a couple where an exit needed to happen. Promises were made about what the transition would mean for the employees, but then reality set in and the all too familiar “sellers remorse” emerged. The beauty of their God-honoring legacy evaporated within mere months.
How do we stop these stories? That was the question I was asking, and our board of directors were asking. We surveyed our membership. In 2016 we found that of our then 1,300+ member companies served, almost 250 were anticipating an external transaction-based exit within the next few years and almost 270 were needing growth capital >$1M within 2 years to support current trajectories. Their #1 concern? It wasn’t finding buyers or capital – there’s a lot of “powder” in the market for well-performing companies. The #1 anxiety was “how do I know that the source of capital will preserve my God-honoring legacy in the business post-transaction, or that with the capital partnership my missional intent will not be handcuffed?”
As an organization with a mission to “equip Christian CEOs and business owners to build great businesses for a greater purpose” towards a vision of “changing the world by advancing the Gospel in the marketplace,” the perils of exits and growth capital transactions is a real threat to our members and our very mission. We do a lot of work around educating for succession readiness, about capital options, funding growth, exit scenarios, and structures…but the perils of seeing these great “business AS ministry” platforms fizzle out due to inevitable transitions was disturbing.
So, in the abundance of problems we were seeing a hypothesis emerging to be tested. Could it be, that in God’s abundant Kingdom economy, that there were Jesus-loving capitalists as equally perplexed about how to find triple bottom line investment opportunities as there were God-honoring businesses needing capital? I believed the answer was YES.
I set out to see if the marketplace already had the resources necessary to assemble what I smoothly called the “Consortium of Like-Minded Capital Providers.” Our marketing team later scrapped my brilliant label for a cooler brand identity of the 3Ten Coalition. We began convening investment bankers (we found at least 3 of the 4 Christian ones!), VCs, PE firms, advisory groups, brokers, ESOP advisors and those who had previously exited to explore the issue with us. We found a number of problems:
(1) How do you find high-performance companies that have a Christian legacy to invest in, where faith is not an excuse for performance and where the faith of the owner means more than just decent morality but an actual Kingdom impact factor?
(2) How do you know that a Christian capitalist won’t just tolerate your faith but actually gets what a faith-fueled business enterprise means?
(3) What are the scorecards and covenants that can normalize intention for the true preservation and even maximization of a Godly legacy through the business? Just as one would hope that 10 years later the operation will have scaled from a capital event, shouldn’t the expectation be for the eternal impact of the business to have likewise scaled beyond just charitable giving from a liquidity event?
(4) How do you moderate such an ecosystem to match benefits and risks for all parties?
(5) How do you create an efficient nexus of key players who are aligned to a shared vision for Gospel-shaped economics, for Kingdom investment principles, for a system of intelligence sharing and accountability?
(6) How do you foster a shared lexicon of meaning when you even talk about legacy, ministry, Kingdom business principles, faith-driven entrepreneurship, missional business, business as ministry and the like?
Those were just some of the “problems.” However, we began to see that in the abundance of problems there was an opportunity to bring a mutual solution to market that might truly pay legacy dividends for years to come. If enough people share a problem, that’s pretty much the definition of a “market,” and one worth addressing in this case!
As relative newcomers to the arena, we’ve recognized the challenge of matching (how to ideal parties find one another in a noisy marketplace?), alignment, education, clarity of meaning/language, and aggregation of the existing resources already deployed.
I don’t believe that the call of God upon any believer is held back for a lack of true resources…but of vision, clarity, and unity. Sometimes leaning into the problem is the beginning of revelation for a breakthrough and I believe the Christian marketplace is clamoring for such breakthroughs!
What are the challenges you see facing the “faith driven investor” arena?