Christian Venture Capital
Investing through Christian venture capital can be a way to combine financial growth with deep held faith. These investors will usually come on board in the beginning stages of a new company's development and are hoping to see a profit. Organizations that have more faith based objectives can also present very unique needs. Capitalists who wish to help worthy ventures grow and prosper will seek out such faith based groups with a desire to extend a helping hand. That helping hand may take one of any number of forms including free consulting services, guidance in management concerns, as well as financial backing. Groups receiving this capital will need to meet certain criteria. In most cases, this criteria will involve some time of missionary goals or a desire to further the Kingdom of God. In many cases, such organizations would never come to fruition without the help of an investment of Christian venture capital. Some investors see their contributions as donations. Financial returns are not always a priority and some capitalists do not expect to make any kind of economic gain by investing in these organizations. A simple belief in the calling of God to ministry may be the main motivating factor for these investing agencies. The idea of giving a needed leg up to worthy and God centered causes is the central goal of these patrons. With a hope for establishing a solid, stable, and financially sound philanthropic or missionary related organization, venture capitalists can make a huge difference in the beginning stages as ministries attempt to gain a foothold.
If a missionary organization exists in a foreign country, obtaining needed financing can be very difficult. Traditional banks and other lenders are not always receptive to the idea of providing funds for overseas concerns, particularly in countries that are considered economically disadvantaged. A provider of Christian venture capital can help organizations deal with this problem, particularly if the missions organization is located in a third world country. In addition to financial help, many organizations will also provide tangible aide in the form of volunteers who travel to the mission itself to offer their services and talents. Donations can also come in the form of small contributions that are provided by churches and individuals and accumulated over time until enough money is raised. In what ever form it takes, such aide and backing is both needed an welcomed by Christian organizations all over the world. Since ongoing support is usually needed, some providers of Christian venture capital will commit to ongoing donations that may come in the form of a monthly contribution. In other situations, the desire is to simply get a faith centered organization off the ground. Support may come in the form of business advice and financial baking in the initial stages of a new venture. Once the company is off the ground, the investors may move on to help another worthy cause.
An understanding of just how such investing can work is important whether investments come as Christian venture capital or in some other form. In some cases, there may be higher risks associated with this type of investment, but there may also be a higher potential for profit. Traditional investors will be looking for organizations that seem to have a great earning potential. Christian investors are looking for potential as well, but this potential may have less of a material focus. If a ministry related venture seems to have a huge potential for spiritual growth and Godly contribution to the community at large, then that organization might look very attractive to any one who is seeking to invest. Many of these ministries are not seen as a good risk by traditional banks and lenders. But since faith based investors have a different set of priorities, they may see an entirely different type of potential in the ministries and organizations that they contribute to. Another way that traditional and faith based investors differ in in the kind of return that is expected. Traditional investors hope to earn a profit, sometimes a substantial one, off of their investment. Investors who provide Christian venture capital are rewarded more by the ministry related success that the receiving organization achieves. For both traditional and faith based investors, a limited partnership is usually the rule, regardless of the size of any contributions.
In the business world, there are financial backers who function with a certain amount of faith, in ways that are somewhat similar to those who contribute Christian venture capital. These investors, sometimes called angel investors, are entrepreneurs who look for opportunities to get in on the ground floor of business opportunities that will be extremely profitable in the long run. Finding financing of this nature can meet important needs for struggling start up businesses. The Bible addresses the hopes and expectations of those in need. For the needy shall not always be forgotten: the expectation of the poor shall not perish for ever. (Psalm 9:18)
When approaching investors, whether they are traditional entrepreneurs or those with Christian venture capital, it is always wise to present a polished image. When making a pitch to potential investors, there are certain things to keep in mind. A succinct and compelling explanation of the goals of the organization is crucial. Including a few personal motivations can be helpful as well. However, a ministry related venture will always want to function in a professional way. Faith based companies and ministries should not assume that anything less than a professional presentation and attitude is required.
Business Venture CapitalObtaining business venture capital can be a high priority for start ups and companies that find themselves behind the eight ball on funding for research and development or marketing. In the strictest sense of the term business venture capital is applied to certain enterprises by investment firms or individuals usually amounting into the millions of dollars. Those companies that catch the eye of potential investors have a very distinct profile. This limits these kinds of funds to only a few select young and high potential companies before the enterprises go public with their stock offerings. There are some distinct characteristics for which a VC investor is looking.
Consider first that in most cases, the product or service provided by the potential client company will need to be in the medical or high tech genre. The potential for breakthrough drugs or a new direction for computing can be worth literally billions of dollars. A provider of VC is going to look hard at the already functioning commerce plan of the young company and in some cases insist on changes made to be more favorable for the investor. A caveat for many VC agreements to be approved is the inclusion of one or more investors coming on board as officers of the company. Since the business venture capital provider often gathers investment money from a number of sources such as other investors and pension funds, the fund resource firm can be quite insistent that great care be taken in who and how the money is given.
Once an agreement has been made with the fledgling company, there then comes the full development of the product which may take a number of years in research and testing. During these intermediate years, or whatever length of time is needed for completion the VC firm or individual will of course take very keen interest in the day to day operations of the company. In most cases, the product does come to fruition and the company goes public, offering shares on the open market to the highest bidders. When that time arrives, the provider of the original business venture capital will take a tremendous profit from its investment. But the company is also going to profit if the original agreement is crafted to include its own enjoyment of the proceeds. A person who wishes to follow God ought to have the attitude of David who uses the word perfect here in the sense of doing all he can to make it happen: "I will behave myself wisely in a perfect way...o when wilt thou come unto me? I will walk within my house with a perfect heart." (Psalm 101:2)
Among the many VC firms that can provide venture capital funding are individuals who are called angel investors. While VC firms with their many association contacts with hundreds of resources can provide hundreds of millions of dollars, an angel investor is often looking for that "entrepreneurial soul mate" that shows great promise. In some cases, the angel moniker may actually fit the personality and motive of the business venture capital provider, and in other cases it will only be about the money. The Small Business Administration estimates that at least a quarter million angel investors are in operation around the United States. The ranges in investment from "angels" may range from about twenty five thousand to a million and a half dollars. And in most cases these types of investors only put money into local companies that they know and can observe. Often, an angel providing business venture capital doesn't have the medical or tech requirements for their investment targets as do firms supplying ginormous capital have, and are also very willing to get involved in helping to guide and advice young companies.
But let's say that both of the options are not available for the small enterprise owner. In that case there are options that maybe have been overlooked. Getting a home equity loan for a business startup may be a perfect solution for that business venture capital need. In this case, a bank or other lender may be willing to fund up to sixty-five or seventy percent of the value of the house equity that you have. A person's credit history and score will have to be pretty good for a bank to even consider such a request. A credit union will have a little less stringent requirements and a loan company even less. But of course as the requirements go down the interest rates climb.
A sit down talk with a Small Business Administration mentor might prove to be very helpful in this whole discussion about business venture capital needs. Without cost, these mentors can help develop a strong business plan, help with the company structure and just be a source of encouragement. And by the way, the angel investor option had not even be considered until after a very strong business plan is in place; a plan that has been thoroughly vetted and scrutinized by a business expert needs to be in order because it will be demanded by the angel. If all else fails, getting a credit card exclusively devoted to the business can be a good idea but care should be exercised in the use of the card. And don't forget to file for incorporation papers if you are a brand new business owner because such filing can bring some tax benefits your way.