Redemptive Investing Looks Beyond Returns

Deploying creative capital for the sake of culture making, innovation, and flourishing.

The following excerpt is taken from our Redemptive Investing playbook—a set of principles inspired by venture funders we’ve partnered with and learned from at Praxis over the years.

Imagine you are an entrepreneur trying to do a new and hard thing in the world. You encounter an investor who is gifted in their craft, unusually patient with you, and transparent about shared goals. They back you because of your mission and challenge you to build a venture that will bring the change you envision, yet clearly value you as a person through persistent care.

This sort of investor—a redemptive investor—has the power to bring abundant and life-giving innovation into the world.

Investing creative capital in entrepreneurial endeavors has been part of our world for centuries. With every great opportunity for exploration and transformation, a group of entrepreneurs races to bring about the change, and a group of backers vies to finance it. This kind of investing is fundamentally an act of shared risk, as investors partner with builders to bring something new to life.

In contrast with the data-driven world of investing in public equities, investing private capital is a much more relational enterprise, occurring within ecosystems of entrepreneurs, individual and institutional co-investors, and other mediating groups such as alumni associations and accelerators.

Two systems have most shaped this field in our generation: venture capital (VC) and impact investing. The creative placement of entrepreneurial capital, as advanced by these two disciplines, has undoubtedly led to immense innovation, considerable social impact, and economic flourishing for many.

Yet redemptive venture investors can reap and spread these benefits while working resolutely against the errors, excesses, and idols that persist downstream of these movements. The core error, we believe, is an impact/returns reversal that distorts the proper relationships among impact, returns, and the trade-offs and risks we take in pursuit of them.

The purpose of money is to accomplish something (impact), not to make more money (returns). And our sustained ability to accomplish anything lasting through business and investing, at least in human terms, depends on our ability to generate returns. These twin realities affirm that impact and returns are inextricably linked—and that they have a rightful ordering.

But this naturally ordered relationship between purpose and returns gets reversed, as money always finds a way of improperly anchoring itself to the primary place in our imagination, hearts, and self-assessment of success. So for nearly all investors—even for self-proclaimed impact investors—the reigning question is “What impact can we get for the returns we’re seeking?” Instead, the governing question for redemptive investors should be closer to “What returns can we get for the impact we’re seeking?”

For the Christian investor, these distinctions are especially stark, given that we are not capital owners pursuing our purposes but stewards pursuing God’s purposes; that we know a great deal about those purposes, even while he gives us freedom to improvise how to pursue them; that what is required of us is not success but faithful obedience; that we are commanded to fight against the pervasive and seductive power of Mammon in our hearts and practices; and that we are called to love God and neighbor in and through the strategic and tactical realities of investing.

For those who see their venture investing as more than just an asset class with a particular type of financial return, but also as a meaningful act of cultural creation, we offer these 6 commitments of redemptive investing:

1. We define a clear mission to guide our investing, focusing our attention on sectors and issues that activate our curiosity and heart for restoration. Through learning, discernment, and design, we create a set of market and cultural theses to help us direct our resources to the most strategic activities and opportunities. Instead of responding mainly to attractive returns or trusting in our own wisdom, we pray for our work to be the servant of a prophetic imagination, recognizing that God’s plan for the world far exceeds our own vision.

2. We design an investment portfolio aimed at building a redemptive future as expressed in our mission and theses. Instead of seeking a target return profile with a relatively agnostic approach to impact, we invest along a spectrum of meaningful risk/return expectations and across multiple theses for the flourishing of individuals, communities, and creation.

3. We establish deal terms and fund structures that align interests as well as growth and timing expectations with the entrepreneurs we back, avoiding practices that leverage our power solely for our advantage and innovating toward generosity and inclusion in venture economics. Whether in deal-by-deal terms or through new funds and alternative investment approaches, we create mutual clarity regarding the ramifications of the capital on the long-term health of the enterprise and its founders.

4. We develop trusting and generative partnerships with our co-investors, sources of capital, investment team, and others in our sphere of work. Instead of seeking merely to maximize our take, we create shared value and earn deep trust, allowing less powerful players to glean investment opportunities and keeping in view all the persons and relationships involved in a healthy investing ecosystem.

5. We treat entrepreneurs as eternal persons with unconditional worth. Instead of deploying them as instruments to create wealth or even impact, we relate to them from our earliest interactions as image-bearers, seeking to deepen our relationship with them as we become more involved in their ventures. We look for ways to love and serve them irrespective of our financial interest, recognizing that founding a venture is a uniquely vulnerable activity that provides extraordinary opportunities for personal and spiritual growth, as well as real dangers. We help them avoid the exploitative, master the ethical, and pursue the redemptive in their dealings with us and other investors, as well as through their venture as a whole. We accompany them in ways that bring lasting personal transformation for them and for us, whatever the outcome of our investment.

6. ‍We cultivate a sense of worth that is separate from our role, results, and resources as a funder, through the lifelong process of surrendering to God our actual or potential wealth and influence. Rather than measure our value through a financial scorecard, we develop the bedrock assurance that our identity rests in our own redemption—having been “bought with a price.” Over time, as we invest out of a deep sense of our vocation, we aim to be freed from anxiety and hurry, to become more evidently joyful and dependent, and to leave a legacy of love.