Four Questions Before You Invest

Jul 13, 2021

What’s worth saying yes to? Every foundation and every venture capital firm have to answer this question on a perpetual basis. So do many people this time of the year facing requests for year-end giving show up in the mailbox or the inbox.

I’ve been asking and answering this question for years. But in the last 3-4 years, I have become clearer than ever where I want to say yes, particularly when it comes to investing.

Over the years, I’ve co-owned several different companies. They all started with me saying yes to some proposition from someone. Figuring out which company to take a chance on isn’t always easy. But having a filter or grid has made the task easier for me. It keeps the yes decision away from impulsive, emotional tugs, or friend pressure.

Unless you are Oprah or Ellen and have a bank of marketing dollars fueling your yes (“You get a car! You get a car! You get a car! Everybody gets a car!”), we need some filter guiding our investment decisions.

I’ve settled on a fourfold filter to guide my personal investment opportunities. I would not dare presume these will fit you, but wanted to share them after a number of you have asked. Here they are:

  1. Is it profitable?
  2. Is it scalable?
  3. Is it redemptive?
  4. Is it healthy?

Now let me be clear. I either need a yes to each question or a clear line of sight on how we are getting to yes for that question. Perhaps my involvement can help get it there – I get that. In other words, your motivation to invest in a company might be so you can make it profitable or healthy. That’s fair. But make sure you have a line of sight on it.

Is It Profitable?

There are times to give money away, no strings attached, but if I’m investing, I’m not trying to give money away. My investment is a means to increase some income eventually.

I’m not alone in this as investors increasingly realize that, contrary to popular wisdom, profitability is more important than growth to last for the long haul.

So I ask hard questions of the companies I am considering investing in. I ask for profit goals, and then dig in to determine whether those profit goals are reasonable or “assuming everything breaks right” goals. I ask about the framework that they have to drive profits and measure results. I’ve run into tons of businesses that can’t miss ideas. Still, they don’t have the back end production plan or distribution plan or employee accountability plan to measure progress and deliver in the long term.

Is It Scalable?

One of the businesses I co-owned faced a crossroads. We had a dynamic leader, but he couldn’t be in all places at once, so we were limited in our growth. He felt the tension, too, and after a long season of considering the options, we made some strategic moves to scale nationally, which meant shifting roles and taking on some additional risk. It hasn’t come without sacrifice, but I will say it’s got a pretty exciting trajectory.

Why is this one of my filters? I understand that not every company is supposed to be scaling right now. But at my age, I don’t have 35 years for a couple of founders to do a bunch of pivots and figure things out. I love the growth that extends our reach, stretches our organizational muscles, and gives us a chance for a timely exit event. So, I need to see the pathway to scale and see it sooner rather than later.

Is It Redemptive?

This question may be a bit unique to me because of the role my faith plays in my life and work.  I want the companies I invest in to have some redemptive edges.

That’s not to say that I expect it always to look the same, but I make sure that company leaders are intentionally asking the question of what makes their enterprise redemptive.

Is it the faith of leadership? Is it the kind of product or service they offer? Is it what they intend to do with their profits? Is it how they treat their employees or customers? Is it the company’s mission and vision? Is it the overt or covert culture of faith?

Do not misunderstand this filter. No two companies look entirely the same regarding this question. There are half a dozen variables that create your unique faith impression. But the companies I invest in must be wrestling with finding their redemptive edges.

Is It Healthy?

When young children are sick, you can tell pretty quickly (whether they voice it or not), and young organizations are no different. For that matter, any age organization can be sick versus healthy. When I consider investing in a company, I’m looking at whether it has a healthy culture and work pace. I’m looking at relationships within the company and specifically between key leaders. I’m looking at whether it is a place of high performance. All of those factors are indicators of health to me.

Patrick Lencioni, in his book, The Advantage: Why Organizational Health Trumps Everything in Business, puts it this way: “An organization has integrity—is healthy—when it is whole, consistent and complete, that is, when its management, operations, strategy, and culture fit together and make sense.”


Again, I don’t expect that a company has figured out everything connected to the four filters. In some ways, if they had, I probably would be coming in too late. But I need to know where they are with these four filters and how they are thinking about them. Your questions may be different than mine, but every investor needs a grid to put opportunities through.

Mine’s just four questions: Is it profitable, is it scalable, is it redemptive, and is it healthy?

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