First published on www.mergon.co.za on October 14, 2022.
When we as stewards of capital invest directly into businesses, impact ventures or non-profit initiatives we are no longer merely stewards of capital – we are also stewards of a relationship with the leaders of those organisations into whose hands we’ve entrusted that capital.
We become partners on a journey and the way we engage on this journey, from the initial stages where trust is built and expectations are set, through the partnership period and right up to the point of exit – will determine whether the relationship will become one of beauty or brokenness.
Unfortunately, the lived experience of many investors and organisational leaders points to the latter, where capital partnerships are mostly shaped by broken motives and models, to result in zero-sum, win-lose outcomes.
The challenge for us as Christ-followers is to chart a different course, to build redemptive capital partnerships, where we accomplish great things together, whilst bringing glory to God through a beautiful relational journey.
In Philippians 2 v 3 – 4, Paul points us to a biblical foundation on which to build redemptive capital partnerships when he writes the following:
‘Do nothing from selfish ambition or vain conceit, but in humility count others more significant than yourselves. Let each of you look not only to his own interests but also to the interests of others.’
I want to highlight three perspectives from this scripture that have shaped our Mergon journey as we’ve partnered with leaders of organisations over many years:
Firstly, it’s not about us.
This is a saying we have at Mergon to remind us that it really isn’t about us, it’s about serving the King and advancing his Kingdom. From this perspective, we can submit ourselves and our ambition to God, the true owner, our abundant source. We can bring our gifts, talents and resources to serve Him as faithful stewards.
We carry this same approach into our partner relationships as we look to serve them, and together build flourishing organisations that make positive and lasting contributions towards society whilst delivering a healthy financial return for its stakeholders.
We build with a multi-generational rather than a short-term mindset, so that even if we only partner with a business or a ministry for a season, they might look back on that season as a definitive one that set them up for success and significance long after our partnership had run its course.
Given this backdrop, you can imagine how deeply humbling it was when, during the COVID-19 season, we faced the prospect of not being able to meet our funding commitments to our ministry partners. We communicated this to them, with a commitment that we would continue to walk by faith and would distribute whatever funds came in, on a month-to-month basis. It was so hard for us to share this because it felt like we had in some way failed our partners.
Yet we were blown away by their response – they encouraged us, they prayed for us and some partners even offered to forego their funding grants in favour of other partners who might have greater need. Similarly, our investment and financing partners rallied around us and pulled out all the stops in order to support our cashflows to ensure we were able to meet our distribution commitments without suffering any permanent value destruction.
It was such a testimony to us of God’s provision and an encouragement to continue to be open-handed rather than driven by fear and selfish ambition in our partnership approach.
Secondly, we surrender power to reframe partnership.
Whether or not we care to admit it, capital comes with power. This power is especially accentuated in contexts like Africa where capital is scarce, where different worldviews collide and where historical patterns of injustice continue to abound.
So, when we as investors enter into a new context or relationship with capital behind us, it inevitably results in a power gap where our views and opinions carry disproportional weight, not because of their merit, but simply because it holds the key to capital.
It quickly seduces us into believing we have all the answers, into taking more than we should in negotiations and into loading unrealistic burdens on the organisations we invest in.
Paul gives us the perfect antidote to this when he instructs us to instead ‘in humility value others above ourselves’. It essentially requires us to let go of our pride and to take a positive, counter-cultural, step in the opposite spirit and to love our neighbour.
So how do we, as investors with capital, knowledge and power engage in humility to value others above ourselves?
At Mergon we start by taking the time to really get to know the leaders we engage with as individuals with their own unique stories, hopes, and dreams. We also seek to grow in our understanding of their culture, the context they operate in and the unique challenges they face.
We design our investment and funding approaches to build alignment, to extend trust and to truly serve the organisational needs and purposes.
Lastly, we resist using power as leverage to get our way or to exploit a situation. Rather, we use whatever power or influence we have to open doors and create opportunities for growth.
As we surrender power, we re-frame the partnership playing field. We extend respect and dignity; we restore broken mindsets and we unlock a different kind of redemptive power that has the inherent potential to reshape nations.
Lastly, we’re in it together.
At Mergon we’re relationally all-in when it comes to partnerships. We love to roll up our sleeves and come alongside our partners to support them on their journey.
That doesn’t mean we shy away from robust conversations. We know that, over the course of this journey, there will be some moments when the stakes are high and our interests may be somewhat misaligned. Our challenge is to navigate even these potentially difficult moments in a way that continues to look out for the interests of one another.
Let me share a story in closing to illustrate how we’ve approached one such moment.
A few years ago we sat down with the CEO of one of our investee businesses to explain that, in our view, the business would perform better in the long term in the hands of another investor. It was a painful moment for both of us since it marked the end of a long and challenging business journey that we had embarked on together.
As we started exploring what an exit might look like, we committed to working together as relational partners on this journey. Together we identified the attributes that would make for a suitable investor. We agreed not to sell the business to a corporate, which would simply absorb it into a bigger group, instead opting to search for an investor who would keep the business, its people and the special culture it had built intact.
When we eventually identified a suitable potential investor, we created space for the CEO and the investor to build a relationship, and only when we were comfortable that the relationship could work did we proceed to negotiate the exit. During the negotiation process, we took great care to consider the interests of the leadership team, the new investor and that of Mergon. It necessitated a level of sacrifice from all parties in order to reach a place of unity and agreement.
When all was said and done, the exit had delivered an acceptable return on investment. Could we have earned a better return if we had taken a harder line? Perhaps. But we walked away with so much more – our relationship with the CEO remained intact; we had built a valuable new relationship with the incoming investor; and the business was truly liberated to flourish.
For us this was effectively a multiplication moment, enabling us to redeploy the returned capital in support of the next venture with whom we could journey as partners for redemptive impact.
Building redemptive capital partnerships is a journey rather than a destination. It requires humility, intentionality, sacrifice and service. We will no doubt fail along the way, but then we learn and grow through it.
The journey holds its own reward. As we mould each other into greater Christ-likeness, we build relationships that could last into eternity and we model a different way of doing business, that brings glory to God and has the power to change hearts and minds.
This article is an overview of Pieter’s talk at the FDI 2022 Conference.