Updated: May 19, 2020
re-posted from faithdriveninvestor.org.
Pragma Advisors recently released The 2020 B4T Investment Market Study—a collection of interviews with more than a dozen of the funds and groups focused on investing in the BAM/B4T space, with faith-driven entrepreneurs at the helm. They were kind enough to sit down with us and answer a few questions about who they are, what this report is all about, and why it matters for the Faith Driven Investor.
FDI: What is Pragma Advisors all about?
Pragma: We are startup advisors and investors who are committed to mobilizing skilled businessmen and women to get involved in the Great Commission using their talent, time & capital. We do that by providing research about the BAM & B4T space and places for our audience to collaborate around interesting companies and deals.
FDI: Who is your intended audience for the study and why?
Pragma: We wrote the study for Kingdom-minded investors because many just aren’t exposed to a broad picture of the BAM/B4T investing landscape. We wanted to highlight areas that need more support in the B4T ecosystem, in particular, thereby advancing the Gospel to the least-reached areas of the world through business.
FDI: What exactly is BAM/B4T and what are the differences between the two?
Pragma: The main difference is that Business for Transformation (B4T) companies are exclusive to least-reached areas, focused on two bottom lines, while Business as Mission (BAM) focuses on four bottom lines. On page four of the study, we show a nice side-by-side comparison to helps articulate the finer points.
FDI: What motivated you and your team to compile this research?
Pragma: I was looking to make investments in B4T funds when I quickly started realizing they all operate differently, with distinct focuses, and various ways to invest or give. After meeting with several, I got introductions to others that were not on my growing list. Finally, when I shared my initial analysis with leaders in the space, they encouraged me to share my findings more broadly. Thus, the market study was born.
FDI: We talk about Faith Driven Investing quite a bit, so what insights did you uncover about the role of faith in Business As Mission and Business For Transformation investments?
Pragma: In talking with seasoned investors, we uncovered war stories of great successes and great failures brought on by unstable economic and geopolitical climates. You find out really quickly what matters to you when things go south. There were also some great wins. Walking by faith doesn’t mean making bad investment decisions, but in BAM / B4T investing, it almost always means taking on much greater risk for the sake of bringing the Gospel to where few have gone before. We found that “Faith-Adjusted Returns” far outweigh the risk, from an eternal perspective.
FDI: Based on your research, where does Pragma see the BAM/B4T investment market heading in the next year or two? Also, what do you see as areas needing improvement or growth?
Since the investment market is young, we see the market maturing the “norms” and “best practices” for the structure, diligence and follow-on support of these types of investments. With all the new funds coming on the scene, there will be a growing need for collaboration across funds and diligence processes. The support services space will also grow to meet the demand. As an industry, we need to do a better job of getting startups validated before they raise money and become more accountable to basic financial management post-investment.
FDI: The report mentions that “all investors need to start by checking their heart-level motivation for investing.” Why was that important to your team and why do you think that matters?
Pragma: As investors, our most present temptation is to protect the money we have as if we are its owner, to the point where we prioritize wealth preservation over Kingdom-advancement. Does that sound familiar? (hint: the one-talent servant who buried it in the ground, and later rebuked). Jesus said, “You cannot serve God and money.” It was important to mention heart-level motivation because we do not own this money we have, but God asks us to faithfully steward it. Checking our hearts allows us to invest wisely and boldly in the face of risk. Investing from a greedy or fearful heart will create agnst, stress and ultimately sin in our hearts.
FDI: During your research, did you find anything that surprised you?
Pragma: We were surprised by how many investors were coming into the space in the last 18 months and also how no one was even close to having the whole list of firms in the space. It underscored the need for such a study like ours to provide that industry-wide view of the funds focused on Business As Mission.
FDI: For people that aren’t aware of many BAM or B4T opportunities, where should they look to learn about them?
Pragma: Great question. Go to the BAM Conference or the B4T Expo to get familiar with the space first. Events are the best way to get exposed not just to deal flow but also to other investors (who you can co-invest with). The Lion’s Den Birmingham and Dallas are local, while the OPEN USA and BAM Global have pitch events along with the ACE Development Fund. Also on page 13 of our study you can find a list of resources hubs and startup training as well.