Episode 183 - Marks on the Markets: Frontier Investing with Pragma Advisors
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Ever wondered where the next great investment opportunities lie beyond the familiar US markets? In this episode, the Pragma Advisors team reveals groundbreaking research showing less than 3% of faith-driven funds are deployed outside the US, highlighting a massive opportunity in frontier markets. Through stories of transformation and practical insights, they explore how investors can make an eternal impact while seeking returns in underserved regions. This episode challenges listeners to think differently about risk, return, and the role of faith-driven capital in building sustainable businesses in the world's most overlooked markets.
Join Richard Cunningham and John Coleman as they examine frontier markets and the 2024 Pramga Investment Market Study alongside Patrick Lowndes, Andrew Winker, and Tamanno Hodjihanova
View the full report here: https://www.pragmaadvisors.com/investment-study
All opinions expressed on this podcast, including the team and guests, are solely their opinions. Host and guests may maintain positions in the companies and securities discussed. This podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization.
Episode Transcript
Transcription is done by an AI software. While technology is an incredible tool to automate this process, there will be misspellings and typos that might accompany it. Please keep that in mind as you work through it.
You're listening to Faith Driven Investor, a podcast that highlights voices from a growing movement of Christ, following investors who believe that God owns it all and cares deeply about the heart posture behind our stewardship. Thanks for listening. Hey everyone. All opinions expressed on this podcast, including the team and guests, are solely their opinions. Hosted guests may maintain positions in the companies of securities discussed, and this podcast is for informational purposes only and should not be relied upon as specific investment advice for any individual or organization. Thanks for listening.
Richard Cunningham Welcome back, everyone, to another episode of the Faith Driven Investor podcast. A joy to have you with us whenever and wherever you are catching this episode. It's the end of October 2020 for its marks on the Markets Pod. The guy we featured on our last Mark's In the Markets podcast is in the studio with me, our co-host John Kuhlman. And John was talking domestic markets, kind of US public markets, broader economic thoughts in the midst of an election year, federal, you know, rate cuts, things of that nature. And John, we're doing something different today, which I'm really excited about because I know we're going to talk about a subject that is particularly top of mind and top of heart for many inside the Faith Driven Investor community. And we're going to zoom in on different markets, and that's frontier in emerging markets. So, John, how are you, man? Good to have you in the podcast studio. And we'll get to introduce our guests here shortly.
John Coleman Yeah, Richard, I'm doing really well. Obviously, this is a topic near and dear to each of our hearts, the heart of our friend Henry Kaestner, who's spending a ton of his time thinking about developing markets and frontier markets now. And I'm really excited to look into this. It also gets us out of the echo chamber of the US election and interest rate movements for the time being, so we can think a little more broadly. So it should be a lot of fun.
Richard Cunningham Isn't that the truth? And so we've got the Pragma advisors team here with us. It's a full house. Patrick Tamano Andrew Just some leaders in the FDA space. Friends. I want you all to introduce yourselves and you're going to start with you. And then also, Patrick, when we come back to you, maybe some of the origin stories as to how this crew came together to put together this particular pragma investment market study for 2020 for Patrick to make sure is.
Patrick Lowndes Man Well, thank you so much for having me and my team here, Richard and John. This is really exciting to get to feature some of this research and some of what we've been up to for, gosh, almost six years now. And from the Seattle area, it was five lovely kids, happily married and coming out of the software industry, but really becoming a generalist across a lot of different kinds of companies. And so a lot of my work and just following the work of really what God is up to in some of the hardest parts of the world to do business now is just drawn, my team and I here to research and canvas the market and so I can share a little bit more about the origin story in a sack. But yeah, we're we're pumped to be here.
Andrew Winker Great. Well, I can jump in. Yeah, it's great to be on the podcast. I'm calling in from Houston today. My wife and I are Houston, been here for for several years. My passion for this space first started right when I was getting ready to enter the workforce. So like most millennials, I had some kind of vague idea of impact in my head, but didn't really know where to direct that. So right before I entered the workforce, I took a class called Perspectives through my local church and really just opened my eyes to the global nature of God's kingdom, you know, the intersection of the unity of the body of Christ, the diversity of the body of Christ, and mutually how we partner together. And I realized that I really want to dedicate my life to building that kingdom, not my own. So that, somewhat unnaturally maybe led me into consulting. But one of the things that led me to jump into that field, I started my career at a Bain and company out of school, and I really loved solving problems alongside tight knit teams of people. Some of the things that gave me the most joy. So the natural evolution of that for me is I've gone throughout the first kind of seven, eight years of my careers thinking about what problems exist in the world today, that I want to really put my shoulder behind solving, and then to who do I want to do that alongside? So right now I've that that's led me a couple of different places. Right now I'm in a fun place where I'm getting to pursue work kind of through a portfolio career, doing a couple of different things, looking at work at the intersection of one redemptive business to radical generosity of capital and then three frontier markets. And I'm like the ones we're looking at. So Paragon was a great fit for that and excited to kind of be a part of the team with Patrick and tomorrow.
Tamanno Hodjihanova Yeah, I love it. Well, my friends, I'm Tamanno. I was originally born in Uzbekistan, so a big part of my passion for Frontier and emerging markets is because I'm a part of the people that will never get to hear right unless we have development and capital and things that are working in those areas and markets for the gospel and and the end for flourishing and what that looks like. I'm calling in from Dallas, Texas. I went to a small little school here and have stayed in the area close to my local church and do a couple of different things. Part of my work is with the Lion's Den and help with a big part of that event, and it's happening in April every year. And then also recently jumped on with a financial advisor, Rachel McDonough, and work alongside her at Wall Square to really connect the head and the heart of investing. Right. How do we take the values that we know that we are called to as believers? And what does it look like in the ways that we do capital?
Richard Cunningham Fantastic. So as you can hear, we've got some experts in the crowd. Get tech entrepreneur, tech investor, Bain consultant with that kind of structured consulting background and then to mano with her roots with Lion's Den, Rachel McDonough, who's been such a key leader in this space in terms of helping advisors and Faith Driven Investor get in the game. And so I'm going to set up a little bit of context on this study. And one of the key things I want to note is this. Study we're talking about from pragma, there are 2024 kind of frontier in emerging markets investment study. It will be available in the show notes for you to download. And then today's kind of topic is going to really be unpacking it. But the reason this is so important is when you look at US public markets, thanks to folks like Tim McCready and the work of Bright Light and his team, among many others, it's pretty easy to go get your arms around the size and kind of the scope and breadth of the Faith Driven Investor movement ecosystem because of reporting standards. Now it gets far more difficult even in established domestic markets here in the US and the private space to understand how large is the faith driven investing ecosystem as we think about venture capital or private equity or private credit, among other asset classes. And you'll get where I'm going with this, because if it's difficult in the US, imagine how tough it is to kind of grasp and get a sense of when you go into not only international markets but frontier in emerging developing markets internationally. And that's the noble and honorable work of our friends here at Pragma who said, Hey, we want to go find who are the fund managers, who are the kind of people captivated by the love of Jesus who understand that redemptive and good business can be a force for good in places where that otherwise might not exist. And so that's what our friends are going to be unpacking here today. And Patrick, with that in mind, would love some more of the origin story, how this crew here came together, what the Lord originally put on your heart and why Pragma came into existence and kind of some of the your origin story. And then we're going to get into the research.
Patrick Lowndes And that's excellent. So a little bit of background. It was, again, like I said about six years ago when pragma started, but even before that, probably for now 15 years I've been that the Lord's called me to be really generous towards NGOs bringing transformation of all different kinds in these tough parts of the world. So my eyes been here when I realized that God's heart includes all people all over the world, and especially the ones that are overlooked. We like to send, you know, a lot of our work to where there's already a foundation. There's already, you know, a strong presence of believers and Christians. And so I've been very much motivated to say, well, hey, where where haven't we gone yet? And so six years ago, we started getting together. Probably about 15 people started circling together at a conference and we said, How do we get together and encourage each other more often? Maybe do some small investments together? How do we help outside of like these conference highs that we typically get? I think we've all been to one of those conferences where we're like, Well, now what? Right? So we started getting together and shortly after we started getting together, I had a pretty big exit event and sold my first software company to ServiceNow. And all of a sudden, you know, at the ripe age of 30, I had this pile of cash that I was like, Wow, what am I supposed to do with this now, Lord? And so I began kind of canvasing the market, figuring out who is putting capital in these parts of the world that I care about. And to be honest, the list was not very long. I mean, John, fortunately, sovereigns is one of the short listed names there that we had, but it wasn't I think it was 17 funds and sources of capital that first year in 2019 when we did the research. And then over the years it's blossomed and grown. And that word, yeah, I think I'll just say that word pragma advisors. It comes from this, you know, the parable and in Luke 19 where Jesus is saying this master said to his servants, Go put this money to work. So we're very interested in like, how can we put our money, our talent, our skills to work? And you know, what that's blossomed into is this focus on the frontier in emerging markets. Starting from only 17 funds. A few years ago, we analyzed more than 100 funds. So praise God for just the movement and the momentum behind the growth in this space. You know, Richard, we can get into some of the details on like how we selected, you know, what we looked at. But I just want to tell that little bit of backstory so people know kind of the origin of where we all started from.
Richard Cunningham And then you guys have an interesting definition for Frontier in emerging markets, I think is also helpful to kind of level set before we get going into the research is just like as your team thinks about defining frontier in emerging markets, oftentimes that can be just an economic calculation as to like a country's GDP or whatnot. And what they're doing kind of from an economic marketplace or mindset. How is the team thought about that as before we kind of get into the research for kind of the geographic landmass for what we're talking about.
Patrick Lowndes Yeah, excellent question. Yeah, we hear this a lot and I think there's a few angles where we can commonly look at this and I'm going to break it into three parts to make it simple. So the first one is economically frontier, right? So they're not a Tier one market still very much developing are on the world scene. It's frontier and it's growing. There's a lot of potential and there's usually a reason why it's not a Tier one market. And that gets to the second issue in frontier and emerging markets, which there tends to be some social, you know, political instability, you know, I'll say destabilizing factors that make these markets more difficult to do business, more difficult to flourish. That's why they're not Tier one markets. And so I think a lot of people have said, hey, I want to go where it's economically. They're not doing well and I want to solve social issues. And we totally agree. Like, let's do that. I mean, I love where the movement's gone and. Sub-Saharan Africa. Also out in Southeast Asia. That third piece that matters to us in our research and as we are kind of evaluating which funds to include, because is this question of where do people only have a very small fraction of a percent of Christians that are living and doing work? Because as Christians were called to be a blessing to our own community? Right. That's part of what God has asked us to do. But if there's like less than 2%, 1%, a fraction, then it's really hard for people to get a taste in a relational way of who Jesus is or what is his kingdom like. And so we're really interested in places basically where there's very few Christians because we feel like that's truly the frontier from a spiritual perspective. In addition to the economic and the social frontiers that we're also tackling. So is that helpful?
John Coleman Yeah. And I want to follow up there, Patrick, because I think what you all have articulated so far is the impact thesis for Frontier in emerging markets meaning and especially the distinctively faith driven impact you're articulating how do we help a portion of the world develop or stabilize that's unstable or developing? How do we, in the process of that, share the gospel, be a good neighbor, demonstrate the love of Jesus? The third question I always have, though, is kind of is there an economic or commercial case for this? And I know there are risks inherent in frontier in emerging markets, obviously, but do you believe there's kind of a commercial or an economic case for investors to feel rosy, not just the impact that they can have, but potentially about the return profile?
Patrick Lowndes Yeah, absolutely, John. And I don't want to steal too much thunder from my team as we're going to get into some of that in the report and kind of what the different categories of financial and commercial return. So that's certainly something we're going to hit on. The little bit that I'll say is, you know, some people look at a new market and they get excited about opportunity. Right? But I'd say most people that haven't done an investment overseas or in a fund overseas, they are usually waiting for a later stage company. They're waiting for a lower risk because I don't want to lose it. In other words, I've got my grip pretty tight on fear of loss. Right? And that's the reason why we don't see people put in half their portfolio necessarily in these markets. Right. We're talking about a smaller chunk, but there is an increasing amount of opportunity. There's another type of investor that looks at these markets and says, wow, I can go after non consumption like the prosperity paradox talks about. I can go after non consumption in a market with kind of a venture capital sized return, but with a much more stable and profitable business because they're just like no competition is for some of these things. So in a stable market, it's really hard to get big returns unless you are like innovating and the only one doing it. Whereas in these other markets there's a lot of whitespace. And so some investors and this is where we're looking for more fund managers to come out, but some are really focused on where's the whitespace and the big opportunity to scale. And that's where there can be massive economic opportunity. And we're starting to see more and more people analyzing their market like that, which is quite financially attractive.
Andrew Winker I think one thing I would add there, Patrick, it's a great point. Really, I would take like a macro lens and a micro lens. I mean, if you look at kind of canvas the markets, we're looking at like at the macro lens, you're looking at two thirds of the world's population, one third of the world's GDP and only 10% of the world's private capital. So just by that alone, a lot of these markets are just undercapitalized. You know, there's a lot of kind of opportunity at that. But I think the caveat there is if you try and kind of cram that opportunity set into the just kind of pure worldly return maximization kind of mindset, it breaks a little bit because I don't think what you can expect is to solve kind of all of those challenges on the typical ten year fund lifecycle to 20 mile, you know, So it kind of takes a different model. And I think there's a real opportunity for the Body of Christ to lean in to some of that risk and think about redefining what does it really look like to see the Kingdom of God transcend in this kind of market with all the flourishing and blessing that that would entail? But I think that we kind of have to shed a lot of our traditional kind of risk paradigms in doing that while still maintaining a level of excellence.
Richard Cunningham I think we're hitting on something important here. And I want to go to Tim on a real quick because she is our person who is has the frontier in emerging markets routes being from Uzbekistan originally. So how would you comment on this? And I know we're kind of pushing off getting into the study. We're going to get their promise. We're kind of teasing it out further. But Tamara, I think it's important to kind of get your commentary and then we'll dive in.
Tamanno Hodjihanova Yeah, that's great. I mean, maybe let's go back. I didn't hear the name Jesus until I came to the States. So I am one of the people who grew up in a region in a place of the world where the name of Jesus is rarely heard and continues to be the case for a big part of the world. And that is a big part of the reason that I think both my heart and. It's hard as and learning to recognize that we as a body of Christ have a commission and a challenge to walk into the hard of places like this and redefine risk and look into a different way of investing to recognize that maybe yes, John, we're maybe not in a place where we can have the same amount of return as you would hear in these markets or even in the public markets here. But there is a place in a space for us to lead out, to recognize that there is an opportunity here that we can both have spiritual, economic and social and environmental impact all at the same time. And we have gotten to see a big part of the organizations and the times that we've gotten to highlight, just even as Patrick mentioned, having 17 come to over 35 this year and see the movement of local leaders and international leaders working in these places and seeking to look at transformation differently, seeking to look at risk differently. I think there's a lot to be said for how this space is changing and how it will continue to over the next couple of years as we get to see more capital and hope and pray that more capital would get deployed in these areas.
Richard Cunningham That leads to a lot of questions. So let's dive in and let's kind of go bottom line up front friends and maybe kind of when you look at this study from a 30,000 foot view, maybe major takeaways and also kind of some of the methodology of the study as well, because we've talked about the number of funds there are out there, the number of capital allocators and the people we can kind of go evaluate and get their sense of how they're thinking about impact plus return is is it more concessionary? Is it fully market rate, whatever that might be? What was kind of the overall approach to the study? And then maybe kind of some of those larger takeaways and then we'll dive into those as we go?
Patrick Lowndes Yeah. Andrew, would you like to maybe talk about we looked at more than 100 funds. What were some of the screening factors that we had? Because I think that while some people might look at the study and say, Hey, wait, you're missing so-and-so. And I think it's just good, maybe the level set with that. And then, yeah, we'll jump into some of the high level themes, but would you mind hitting that for us?
Andrew Winker Yeah, no, I think that one of the things I had found into my brain for my consulting lifestyle was kind of what it means to take a hypothesis or a thesis driven approach, you know? So with that in mind, kind of our overall way we looked at this was just start off with a couple of relatively simple critical questions that we wanted to answer. So things like we already talked about a little bit, what do we mean by frontier markets? You know, who's even participating in this space, who's been doing work here? How much capital is being deployed? Where is it being deployed? What's the target financial return of those investors. So we kind of set out with a couple of questions we wanted to answer. And then from there, it was a lot of kind of honestly, a lot of picking up, don't you know, we did over 30, 40 kind of interviews to really get a kind of a bottoms up perspective of what's going on in these markets. We supplemented that with a lot of secondary research. I mean, huge things. It was incredible to kind of go through the database that FDI has of these kinds of different funds in different places and get to supplement that with some primary research. So kind of a combo of both of those things. And we do want to celebrate. There's a wide variety of approaches people have to this. Our particular criteria for when we were looking at funds was first and foremost sources of capital that are kind of led by Christians or followers of Jesus, focused on companies with Christian or Kingdom kind of led founders and leaders that are pursuing multiple bottom lines of impact and what they're doing, and they're deploying capital directly into companies. So those are the four kind of criteria we looked like. And that kind of frames up the who in the landscape that we're looking at in the study.
Richard Cunningham Helpful. So we got Faith Driven Investor is deploying into Faith driven entrepreneurs direct investments. So the investor is kind of exercising their influence as being a shareholder on the company's cap table. Good. Patrick, what else would you add?
Patrick Lowndes The thing that I was going to highlight were and you ask are like, what are the big takeaways? And this might be obvious, but just to state it and you'll see it graphically in the study, just there's a big uneven distribution of capital. We're talking about less than 3% of funds in the space deployed outside of the US. And if you're looking in, our target area tends to be North Africa and the Middle East and the better part of Asia. We're talking about point 1% of funds that are intentionally deployed towards these kinds of markets. So I mean, we got a lot of headroom to grow in this space. But the second big takeaway that we had is just we talked with lots of fund managers. We talked with individual investors who are prolific in this part of the world. And another theme came up, John, it kind of begs it goes back to your question about what are your expectations? And so, you know, having the right expectations matters a lot. So this is the third time we've done this study. Some of our favorite reports that we do and the analysis is are two by two. And I'll just take a second, Richard. I'll just unpack that. So what we've got is this two by two looking at on the y axis going up the left side, we've got kind of geography. Where are you focused? Right. So again, the parts where capital is prolific and saturated, abundant, it's on the bottom. And where it's not abundant tends to be. On the top in our target area of focus. And then on the bottom is the target investor financial return. There's about 44 funds that we analyze in this space. And you can see a nice gap of how much capital that's being deployed. And what you'll see when you look at that is just it's pretty stark how tiny the dots are and the bubbles are that are deployed in these parts of the world. And then just as you kind of get to the more established parts of world, naturally that's where more capital will be. So we think that's a helpful way for people to understand who's focusing on some of these harder to reach areas in the frontiers and how can I orient part of my own risk profile to try to maybe step into that, maybe to try to you know, this is called Faith Driven Investor. Like, where's my faith? Am I going to invest only by risk adjusted returns, or am I actually going to invest in faith that maybe in sometimes makes me look like a fool, right? Am I willing to actually risk some of my own perception, you know, in the market to friends or my financial advisor? If I make some bets, that might look really risky. But to the kingdom of God, if you're able to move the needle beyond just the financial, do you remember to move the needle on other areas? I mean, I had a CFO one time show me the IRR, you know, with looking at all the factors, all the bottom lines. And if you look at for all eternity, out to the right. The IRR numbers are ridiculous. If you truly do value those other kinds of impact as being real impact. So it's just a very different way to look at investing in these parts of the world. So that two by two, I just give a shout out there, Richard. That's usually our favorite. People say, I never knew where the money is going in the world.
John Coleman So let me dig into the topic with you also, as I mentioned to you guys, since we were chatting beforehand. I've spent a little bit of time in developing markets, worked in Afghanistan and Saudi Arabia, had teams in the Middle East and Africa and Asia for a while. And, you know, there are a lot of legitimate challenges, I would say, that make excellence operating in emerging markets even more important than operating in U.S. markets. You know, on Faith Driven Investor, we often talk about trying to institutionalize the space such that people are investing because we're really excellent at what we do, not just because we're Christians. And I think the demand for that in emerging markets or frontier markets, and this is my personal opinion, can even be greater because I've also seen how destructive certain types of philanthropy and investment can be in emerging markets. There are legitimate concerns that entail real risk. People care about the security and safety of the people for which they have responsibility. Obviously, even regulations, anti-terrorism measures like we had to blacklist certain countries in the frontier markets, even at relatively extensive investment firms. I was out because we couldn't be implicated in not understanding where the financial management of those funds was going to. And even when I was on the ground in Afghanistan, we were still having to pay for things with briefcases full of cash and the controls over that was challenging. It was really challenging to think about operating in that environment. So apart from just kind of the risk tolerance people might have for losing their capital, how do you think about the demand for excellence in emerging and frontier markets, both for the protection of investors, but also to assure that that capital is serving a constructive rather than a destructive purpose with the people it's encountering?
Andrew Winker I mean, John, I think it's an excellent question. I mean, I think that we've all seen a lot of the harm that aid can do when you might be trying to solve the wrong problem with aid. You know, and I think one of the really cool things that we see in this space is a lot of the things that we highlight is there's really kind of a community element to it. You know, so if you think about how are we not just deploying capital into these regions, how are we really also putting our shoulder behind trying to really think about solving some of those problems alongside others? So several of these groups I mean, I work at the fund that has kind of every single investment is paired kind of within this mentor network. You know, so if a company that's doing a food distribution business in Central Asia is looking at, hey, how do we solve some of these problems, well, let's find someone in our network that was a VP at Cisco Foods for for 25 years. And how do we actually connect them to where we're not reinventing the wheel, solving some of these problems? It's just a more effective distribution, you know, of really kind of matching those problems. But I think that that will take patience. You know, I mean, you're dealing across some more like that example I gave was someone that probably is more Western on the Cisco side dealing with someone in a frontier market, with a different culture, with a different kind of land. And so it really does, I think, take this mutuality of relationships going in to do that. But I think there's an incredible opportunity for it. I think it just takes kind of reengaged with a little bit more than capital, which is one of the reasons we had a lot of there's a lot of incredible capacity builders doing work in this space, too. You know, so we really long to see there be collaboration across, I guess we could call the whole value chain of capital into these markets, you know, and really see some collaboration both across kind of individuals joining these teams, but also organizations themselves.
John Coleman I love those stories and I would love I mean, if you all have another example would be kind of fun to hear a story of someone who's navigating this well.
Tamanno Hodjihanova Yeah. I don't know if I have a story, but maybe to add on to what Andrew was saying is I think it's also really important to have local leaders on the ground in those countries. Right. It's one thing to try to have a fund here focused on a country in the West, you know, from the West perspective, and that's great. But there's a part of trust community building, relational building that you don't get unless you have a team and people locally on the ground that know, get a sense for the culture, know what it is to work. And so a lot of the organizations that we interviewed and you tell me if I'm wrong, but most of them have and or travel pretty extensively into those regions or have teams on the ground or have partnerships that they have developed over the years that allow them to help with some of the due diligence, some of the work that's happening in relational building as well as our story that we can think of. I think that'd be fun to share.
Andrew Winker I was just going to share, I think one group that's kind of pulling together a lot of this stuff in a really cool way is a group called Angelo Investment Network. And so they're actually a network of these different fund managers and kind of entrepreneurs. And so one of the really encouraging things that I learned through this study was just kind of seeing the seeds of some really incredible locally led ecosystems in places like Egypt, Pakistan, Mongolia, with a lot of national and leaders really coming together and saying, hey, how do we think about really blessing our markets? You know, and I think that we really have an opportunity to join with our brothers and sisters in those parts of the world, you know, and learn from each other, you know, and actually pull up to the table and listen. There's kind of this convening of these leaders. And so I think that that's one story, an example of I think that we really can kind of come to that table as listeners and say, hey, what does God do it in these parts of the world that we might not even know about, you know, and how do we kind of doing this? That's one group, I think, from the study that I was really encouraged by. There's there's plenty more. We we actually kind of profile meetings like 5 to 7 that we know particularly well. So if you're curious for more specific kind of stories, I would point to those in the study of some of those kinds of sources of capital or funds that have been operating for a long time in these parts of the world.
John Coleman That's awesome And maybe articulate. You know, I think one thing that people overlook, there is such a history of charity in these regions, right? I think when people think about doing something good in Africa or in parts of Central Asia or in parts of Southeast Asia that are more impoverished, they typically think about funding one of the excellent humanitarian organizations, anti-poverty organizations like World Vision or Compassion. And those play a role. But I also think that the future of these regions will be contingent upon them developing their own sustainable enterprises. Right. I mean, that was really the work we were tasked with when I was in Afghanistan was aid was almost distorting that economy in unhelpful ways because the smartest, best equipped people were all figuring out ways to just work with the United Nations or with other organizations handing out aid rather than building businesses. Right. That would exist long after these aid organizations had exited. Talk about, if you don't mind, just kind of the role that private capital plays in building sustainable industry or business in these areas versus the philanthropic which is worthwhile in its own right. So I'm not diminishing that but is not well equipped for certain problems.
Patrick Lowndes John, we have on page six of the report, we have a really. A nice classic. That kind of helps picture the difference and like kind of the role that aid and charity play alongside in sort of like relief as opposed to just like rehabilitation and then the final stages like development. How do we now develop out of that? Right? So I'd point people to page six of the study, but at a high level, you know, leaders like Angela have told us we don't just need people to show up and dump lots of investment capital into markets today. We don't need that necessarily right now. What we need is the awareness of where communities are and ecosystems are in the stage of maturity and readiness, because sometimes we're still working on the basic like shifts in mindsets and critical thinking and shifts and mindsets on how does relationships work. But transparency, where I'm willing to collaborate instead of hoard power, right, where I'm not in a survival mindset, but I'm in more of a flourishing, an abundance mindset, right? Kurt Laird's book, The Culture Key, really unpacks this. If you want a good long read on this topic. And he actually was in Afghanistan telling a lot of these stories. So I would say coming to the table as an investor, the first good question to ask is who's already here? What's already happening and how ready are they to pursue? Even if you have a pitch deck in front of you, like how ready are they within their market to operate this kind of a business? Right. And those are the kinds of questions, some of the most excellently run funds, they have networks of people on the ground. These are not people just flying in from across the world and have no context culturally. So I think that's how we as Faith Driven Investor can come in with foreign direct investment as an excellent partner and co investor.
Richard Cunningham That's really good. All right. So there's so much in so many different directions we could go in and I'm enjoying this conversation a lot, but one of the things I want to talk about is making it super relevant to the Faith Driven Investor who's listening to this and is just like, Man, I'm just trying to think about how to implement negative or positive screens in my public market holdings and my asset allocation here domestically at home, like Frontier and Emerging Markets was maybe on my mind from a like a charitable capital standpoint. Now you're kind of giving me the argument that, okay, like maybe this should also be something I consider from a investment capital standpoint. Patrick, you mentioned on page six that kind of overview of moving beyond charity. And I also think, you know, Greg learned a hand as the person I think of in the FDI ecosystem is help kind of popularize this idea around. Like as Americans, we give $557 billion and I'm using your data here. This is from 2023 to charity. And we have a million and a half nonprofits in the US competing for that same kind of pool of capital, which is that $557 billion it's given the charity. Now that's a significant amount of wealth and capital that's given, but there's $50 trillion of investable assets in the US alone. And we probably estimate just from kind of demographic data that 50% of that is held by Christian. So I love the way that you guys unpack this, where it's saying, Hey, there is a charitable universe to this, but there's also an investable universe. So maybe lean more into those tensions. And I also want to talk about kind of dipping back into the terrible waters, how this is possibly a way for someone to engage with donor advised fund capital. So now it's kind of the blended world where it is given capital that can also be thought of as impact investment capital, not just given capital to adapt. That goes out as a grant to A501C3, but it's given that could then be invested. So what thoughts do you guys have there?
Tamanno Hodjihanova And that's great. So I think the question of I love that we get to blend both charitable and investment, all our conversations in the ways that we approach capital and maybe to make it super practical to the general Faith Driven Investor audience. Right. It certainly is recognizing that and we say this a lot on the feature and podcast, Everything that we own, everything that we have got, owns, right? It is all his those resources all belong to him. So what would he have you do? What could that look like? Is there things that you're not currently thinking of in the ways that he would have you to do with that capital that may be a little outside of your comfort zone, and a part of it is leaning in to recognize that that could be the case. And a second is there's a section in the report where we talk about how do you prepare yourself and then how do you walk with people and walk alongside them? The stuff is really hard and nuanced and it's not something that you jump into and automatically know what to do or how to walk in the steps over. There are people who are leaders that we stand on the shoulders of that have continued to do this work. And so I would just encourage you to walk alongside your financial advisor if that's the case. Right. Or finding people in the future in space that are working out sort of answer the questions that are hard and take a lot of time and due diligence. The other part of it is getting involved in communities and in events that are doing work like this that allow you to take small steps and invest with others to learn more. Something that I think I would encourage our veteran community is to look that our patients, we often want really quick results for lots of different things. I want to be able to invest capital and great after this all works out. But the reality is most people have been burnt out in front of an emerging market investments. We've talked about this beforehand. This is really hard. It's probably not going to go the way that you thought will. And so taking baby steps will be the best way to walk into that space to know how you do that with others and then recognizing that there are ways and things that we can learn even when investments may not go the way that you thought. And this is also not a big part of your portfolio. Please don't put all of your investment capital into what this looks like. But there are ways that we get to deploy mindfully and with wisdom to know how to do that. Does that help A little bit. And Andrew, please. The deaf world is fascinating because I think it's a great first step that will allow you to donate, but also then get to experience kind of the investment side and working alongside some of the funds and companies.
John Coleman And maybe before Andrew jumps in, the one comment I'd offer there is people can often put more capital to work here than they think. I agree with you. If you're managing kind of a balanced portfolio of your private capital, that frontier in emerging markets would typically be a small percentage thought about differently in the dark world, for example, which you just brought up. If you're dedicating a lot of philanthropic capital to the emerging world, your ability to repurpose that, at least temporarily, for investments in the emerging world, which could ultimately then also be given philanthropically because you're trying to earn a return on that capital could be a smart way to deploy that. Right. If you've got a great deal of your wealth, I mean, we know people, thank goodness, in our ecosystem who really believe this idea. You talked about that it's all God's right. And so they're putting 90% of their net worth into philanthropic capital. You know, thinking about repurposing some of that, at least for a time, into investment capital or vice funds through places like Impact Foundation, etc.. You can actually put a lot of capital to work here and with a totally different mindset than you might take to call it your standard investment portfolio. Right. And so I would push our listeners maybe a bit further than you would because you're being so conscientious that especially with resources like you all are developing that give people Guideposts to where they might steward this effectively, our ability to think creatively about the capital we deploy in this space and hopefully provide enough capital that we can be catalytic to those regions. I think there's an extraordinary opportunity there. And you're right, everyone needs to be sensible. You don't want to put capital to work that you need to survive or that your kids need to go to college necessarily. But there are pools of capital out there that I think people could see through this way. So not contradicting what you said at all, but just saying you're being incredibly conscientious, which is appropriate. But I think the vast majority of Christians who are dedicating a lot of philanthropic capital really could think more creatively about the ways in which they deploy that sometimes in this space.
Andrew Winker John I think that's spot on. And if you look at the last like in 2022, there's an estimated 224 billion in DAF assets. You know, if you look at our study, like when we kind of layer in, I mean, obviously pointing to Tim McCreadie did some awesome research. There's 100 billion public markets Faith Driven Investor you know so even if you just think about wait, there's two acts the number of DAF capital assets sitting waiting to be deployed. I think that the idea of permanent capital is an excellent lever. You know, it seems like a no regrets move that if if you had a magic wand and you could think about how can we creatively and patiently take that capital, that might be it's already pre given, you know, and think about really joining alongside others. I think that's a definitely a an arrow in the quiver to think about. That being said, I mean I do think there really are opportunities from anything from pure donation, you know, to helping to operating budgets of things, to catalytic capital, you know, looking at more kind of below market returns, but with a longer term impact all the way to there are opportunities for above market returns, as Patrick was saying, in some of these places. You know, I think those are all kind of areas in the quiver in an impact foundation. Using your DAF to invest is definitely an important lever there. I think that on the concept of time horizon is important here. You know, in general, I think that faithfulness over long periods of time is what yields fruitfulness. And so if we really are investing for eternity, you know, I think that we need to be able to stretch beyond that typical ten year fund life cycle that most people think about. And that's typically the book end of our time. And if we're honest, a lot of times you're not even patient for that long. You know, if you're really trying to invest for enduring transformation, it's going to take time and patience, but it will be so worth it. It is so much joy to get to labor alongside our brothers and sisters, join Shoulders and do this together. But it's going to take it out of the comfort zone a little bit.
Richard Cunningham I want to do this real quickly. I want to hear from each of you. When you think about the number of funds you got to interview the 40 something plus that ended up in the study and a name comes to mind from it from an impact methodology and approach. We've got to be careful here that this is by no means an investment recommendation. We're trying to highlight and shine a spotlight on great work and faithful believers getting to work in markets that otherwise there hasn't been a lot of activity. But I think each of you Rapid Fire would love to hear you talk about a particular approach that you're captivated by and maybe kind of set up who they are, where they're operating, what their kind of methodology is to kind of help give more kind of color and texture to some of these funds you've interviewed. Patrick, let's start with you.
Patrick Lowndes Yeah. I mean, I think clearly the leader in this space, I would say, is transformational as Sammy for more than 20 years, I mean, $9 million of capital and the level of diligence and rigor on the ground and the people, I mean, they have basically shown us as younger, you know, next generation shown us, here's how not to screw it up. Right. And so I think I look up to transformational, see me as probably one of the leaders in the space. And we did highlight we did a little feature on them. And again, it's not a recommendation, it's just something to go research. We're a research group with that. So yeah, that's one.
Andrew Winker I can go next and let tomorrow. Hopefully I don't steal yours tomorrow. And I loved I think a lot of listeners might be familiar with the Lion's Den. You know, there are some great lions dens in Birmingham and in DFW. One of my favorites that I've gotten to participate in the past couple of years is a lion's den put on by a group called the Open Network. And that's a really incredible way to kind of learn in community. You know, so making direct investments in some of these companies, getting to meet and just hear the stories of people running these businesses, but then also going to invest alongside others, you know, who have some experience doing that. So it was a really fun way for me, kind of relatively early on to pull together capital with some friends and invest in that kind of way. So again, as Patrick said, caveat that with 50 million different kind of disclaimers of not professional investing advice, but we really I think they're doing some great stuff. And Angela network, as we said earlier to you.
Tamanno Hodjihanova Yeah, I'll hone in on Angela for a little bit. I know we've already mentioned them, but something that really stands out to me with them is that they're not operating out of the US. They're also very locally ecosystem minded, right? So they are bringing together leaders and investment operators that are based in those regions and helping them to think holistically about a transformational plan not just for their city, but for the entire country. And then looking at how to create ecosystems and support around that, that allow for long term development and transformation, which I think is just super, super cool. That's really encouraging for my heart to know that we have local leaders on the ground that are creating funds and investment networks and working alongside to do that for their own regions, which is at the end of the day, that's where we want those communities to be.
John Coleman Well, I know Richard's about to drive us to our final question, which we always ask about what folks are learning through Scripture. I wanted to conclude before we do that and we closed the podcast just saying two things. One is I really appreciate the work that you guys are doing. I think we are called as Christians to engage with the poor and disenfranchized. We're called to engage with the world broadly to those who are unreached. So many of those are outside of the developed markets right now, where most of us live. Most listeners are actually in the United States, for example, where there's a mission field of its own. But we're really called to engage more broadly than that and to bring the church abroad. And I think we have an obligation to that, not just as Christians, but as human beings, right? Where there's the greatest need in the world is often outside of our country. And I love that you guys are adding rigor to this, that you're trying to help be a guidepost to others. Patrick That you're putting your own all of your putting your own resources against this in a way that's showing that you're supporting on behalf of something greater than yourself, not just for yourself and the heart that you all have for this is awesome. And I'd really encourage FDI investors, as Richard was saying, this is kind of the final horizon. This is the frontier for most folks because, you know, public equities is where you start getting into private equity itself is a little bit challenging. Sometimes thinking about doing that in Ethiopia or in Afghanistan or Tajikistan, etc., is probably even a step further. And the fact that you all are trying to professionalize this space, but research against it to identify those who can be effective partners in this space. Man, what an awesome mission. Field and our our hope. I know I know Henry is deeply passionate about this is that folks will join him in that mission or really inappropriate ways to monitor to your point, with their own finances. Think about how to do that and really make this a core part of the way in which they engage philanthropically and through investment dollars, whether philanthropic or private in me. And I'm just so encouraged by the work you all are doing to put diligence behind this and rigor behind this, because I think it's exactly what's needed in this space.
Richard Cunningham Yeah, I'll pile on because I'm scrolling through the research report in full, as John is saying this comment, and I'm astounded. Like you've got a market map and it's not just the sources of capital. We've been talking about the funds I've highlighted, but there's also the capacity builders, there's the investor support. So the advisors that are really thinking about this, there is the infrastructure in terms of like, hey, how could this capital actually flow? Then there is specific breakdowns of those different sources of capital who they are, where they're operating. There's investment minimums. Then there's thought leadership around like, Hey, is that equity, is it debt, is it performance based kind of revenue financing? What does that look like? They unpack the value of having a guide. They provide specific highlights and amounts deployed. I think people often ask is like, hey, give us the specifics. We're looking for kind of the the teasers and the two pages and that overviews of like how I could actually as a Faith Driven Investor step up and get in the game. And so I think this research, as John is saying, is crucial to that. I'm also a sucker for a good two by two framework, and Patrick got into that earlier. It's phenomenal. It breaks it down geography basis. So I'll stop there. I could pile on all day long, but thank you guys for this exceptional work. And we're going to close with what we always love to ask. I'm going to go around the horn and be brief because I know we've gone a little long here. Is that what's God been teaching you in in through his word lately? We'll go Patrick Tamano and then Andrew. That's our final question we love to ask each and every iPod.
Patrick Lowndes Well, we're in the book of Exodus at our church and how God shows his power over the gods among us. And the most popular competitor to God being the God of men in our money. So I've just been encouraged that even in this alternative investment class, I shouldn't worship my financial security or my portfolio return, but I should be just remembering that God is my provider. Seek His kingdom first. You know, even like I was just mentioned in the Richard Garnett episode 180, just being focused on eternity. So that's what I'm learning in the Book of Exodus.
Tamanno Hodjihanova Yeah. That's awesome. I love the Book of Access. I've been reading through the Gospel of Matthew and I've just been struck by how many times the word behold gets used before miracles or certain things that Jesus will do. And just a reminder for my heart. Right. The Lord is not asking us to do all the things just for the sake of doing them, but rather we get to behold and see the work that he's doing and will continue to do and join alongside him in that. And man, what a cool way of getting to see his glory and his faithfulness even more so as we just get to look to him for those things.
Andrew Winker It's an awesome company. Yeah, I've been trying to spend a lot of time just naturally. I've kind of run pretty fast, so trying to slow myself down and really enjoy, just kind of trying to chew on just the Sermon on the Mount. And so specifically just it's been incredibly freeing for me, hearing Jesus's words talking about do not be anxious, you know, just kind of soaking in the language of will he not much more. Just those kinds of words. So really trying to simplify my life around what does it mean to seek first the kingdom? You know, it's his job to provide for my needs, not mine. A lot of times I can kind of run to that. And so those types of things can sound cliche to me, but so I really have to remind myself that seeking first the kingdom doesn't mean seeking first my job or my work so that I can seek first the kingdom or trying to mobilize others into seeking first the kingdom without doing it myself. It it's really, truly trying to build my whole life purpose around enjoying God, beholding Jesus and partnering with Him to build this kingdom where it's moving. And so it's truly what my heart longs for, or at least it's what I want it to. Sometimes it doesn't, but that's been freeing for me.
Richard Cunningham It's good. Andrew My wife's memorizing the Sermon on the Mount right now, and I think it's slowing her down.
Andrew Winker She's got me beat. I'm not trying. I'm. I'm. I wish I could memorize it.
Richard Cunningham She's way cooler and better than I am. All right. A bonus round question really fast, Patrick. Pragma has done this incredible study, but there's more that you're up to. And I think kind of the framework of what all you're doing helps people kind of understand the necessity and the size of the opportunity. So close is there.
Patrick Lowndes I'll give you three pillars. So this is our first pillar insights into research. And this is also what has been happening where capital is flowing. We're also beginning to look at where market opportunity could be in some of these markets. So more on that. That'll be a future episode. We'll talk about that. The second piece is just investment advisory and trying to work with family offices that are looking to get more strategic. How do I take the first steps? How do I think about all the different options in the space? And the final piece is, even if you have market opportunity and you have a plan to deploy capital, you need talent, you need great operators. And so we've been doing this for six years now, helping operators get a little bit sharper. And so that talent pipeline is the third pillar of what we like to do. And there are some ways that we do that. But yeah, we love any and all those things that are going to catalyze more resources, more excellent operators. And at the end of the day, a lot more people that love Jesus blessing the nations and the whole world with their gifts.
Richard Cunningham Super cool. Well, hey, this has been the Faith Driven Investor podcast where we're zooming in on the 2024 pragma investment market study focused on emerging and frontier markets. Patrick Kimono Andrew, one encouragement to have you on Friends. You're going to download this report either at pragma advisors.com or we'll have it in the show notes. So we're going to look at and say, Yeah, this looks like it was put together by some expert consultants. It's good work. And so thank you for being on Friends and we will catch everyone next time.
Andrew Winker Thank you.
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