Hi—venture capitalist here! Great post, but am mostly curious about the financial side of an operation like this.
Most important: Returns (I am in VC after all)
Is financial return at all important to the funders? If so, how does that work, cash comes in the form of donations, some of which results in profit, some of which is returned to funders as dividends (so more of a long-term buy-and-hold strategy)?
Or is it rather more VC like, in the sense that money is only made once the church is sold to other denominations or ‘scaling specialists’? (So cash only at exit)
Then the most important, assuming its one of the two above, what then are returns one can expect as a funder? And as a planter? On invested capital (i.e. multiples?)
Second most important: Non-financial returns
I assume, besides potential financial returns, another important element for funders are non-financial returns, which I assume is quite simply the number of poor sods converted.
Do funders consider this as a source of non-financial returns, or are they purely there for the money?
What can one expect in terms of number of people converted per dollar, how much does it usually cost?
Third: Control
Is the church set up using an ownership structure, and do the funders get shares in that structure?
Is there control associated with ownership? I.e. can the funders sack the planter but keep the church?
Very interesting article—curious if there’s any info on the above!
My sense is that for almost all funders, money is viewed as an input with which to save souls, rather than a terminal goal like it is for VCs. Which isn’t to say there aren’t financial abuses, but they genuinely feel like a departure from form, rather than especially obvious cases of something everyone is doing.
With non-denominational churches, funders can’t sack the planter, they can just decline future funding. It’s not impossible they could fund a hostile takeover, but early church plants are such cults of personality with so little in assets that it wouldn’t really make sense to do so- you’d rather just found another planter who can start his own cult of personality (who might buy the sound system off a failed plant). As churches get bigger there will generally be a board who might have the power to fire the pastor, and denominational churches are either subject to control by the denomination or have a board with firing power from the beginning.
Hi—venture capitalist here! Great post, but am mostly curious about the financial side of an operation like this.
Most important: Returns (I am in VC after all)
Is financial return at all important to the funders? If so, how does that work, cash comes in the form of donations, some of which results in profit, some of which is returned to funders as dividends (so more of a long-term buy-and-hold strategy)?
Or is it rather more VC like, in the sense that money is only made once the church is sold to other denominations or ‘scaling specialists’? (So cash only at exit)
Then the most important, assuming its one of the two above, what then are returns one can expect as a funder? And as a planter? On invested capital (i.e. multiples?)
Second most important: Non-financial returns
I assume, besides potential financial returns, another important element for funders are non-financial returns, which I assume is quite simply the number of poor sods converted.
Do funders consider this as a source of non-financial returns, or are they purely there for the money?
What can one expect in terms of number of people converted per dollar, how much does it usually cost?
Third: Control
Is the church set up using an ownership structure, and do the funders get shares in that structure?
Is there control associated with ownership? I.e. can the funders sack the planter but keep the church?
Very interesting article—curious if there’s any info on the above!
My sense is that for almost all funders, money is viewed as an input with which to save souls, rather than a terminal goal like it is for VCs. Which isn’t to say there aren’t financial abuses, but they genuinely feel like a departure from form, rather than especially obvious cases of something everyone is doing.
With non-denominational churches, funders can’t sack the planter, they can just decline future funding. It’s not impossible they could fund a hostile takeover, but early church plants are such cults of personality with so little in assets that it wouldn’t really make sense to do so- you’d rather just found another planter who can start his own cult of personality (who might buy the sound system off a failed plant). As churches get bigger there will generally be a board who might have the power to fire the pastor, and denominational churches are either subject to control by the denomination or have a board with firing power from the beginning.