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F-U-N-D-E-D: Silicon Valley gives rare blessing to software for church

Startups catering to religious groups promise more parishioners -- and donations.

Churches are experimenting with software to fill the pews, pay the bills and make running a congregation a little easier.

Pascal Deloche/Godong/Corbis

Venture capitalists sit on large piles of money, and they're fond of spreading it far and wide. So the companies that get funded pretty much cover the gamut, from drone and gadget makers to robots, selfie sticks and one more social network (why not?).

But here's what doesn't generally get Silicon Valley's blessing: businesses in the business of religion.

So a $2 million investment in ChurchDesk last week stood out -- maybe even a lot.

Unlike a lot of startups, ChurchDesk's name actually has something to do with what it does. Christian Steffensen began building the firm in 2010 after watching his pastor-mother struggle with the day-to-day realities of running her congregation. In many ways, Steffensen's company is like a Salesforce.com for churches, providing Internet-based software to help pastors pay their bills, track expenses, communicate with parishioners and organize volunteers all via a mobile app, if they want it. Today, more than 1,000 churches in Denmark, Germany and the United Kingdom use ChurchDesk.

The new cash, which is a drop in a bucket compared with the tens of millions of dollars other startups often raise, will help ChurchDesk expand its presence throughout Europe. The investment was headed by Luxembourg-based Mangrove Capital Partners, an early investor in Internet phone giant Skype.

So far this year, venture capitalists have spent $5 million on startups in the business of religion, according to venture research firm PitchBook. That amounts to double the amount invested in all of last year, but no one's calling it a trend... yet.

Venture capitalists aren't showering money on a Facebook-for-Mormons or a Reddit-for-Rabbis or even another church-management service like ChurchDesk. But despite the lack of any financial backing from Silicon Valley, technology continues to push further into religious life.

Today, there are dozens of startups focused exclusively on the demands of religious institutions. And much like businesses, churches have reached out to tech to innovate, says Lauren Hunter, who runs Church Tech Today. For churches, that means filling the pews and those pesky donation baskets.

Hunter says an ongoing question among pastors is whether texting parishioners Saturday night will increase attendance Sunday morning. And in a blog post last month, for example, Hunter looked at how one small church in California is using text messaging. In another post, she writes about the mistakes churches make when using social media.

Religious groups usually communicate with their members through daily or weekly bulletins filled with community info, Bible verses and any other news pastors want to share with their flocks. So, naturally, there's a startup trying to digitize -- and commercialize -- the business of the church bulletin as well.

"Boring church bulletin?" asks a recent web ad by Service Sheets whose software allows pastors to create Web bulletins and send them to congregants via text message.

In a bizarre business proposition, a facial-recognition startup called Churchix.com even promises to give pastors the ability to identify people sitting in the pews, whether they want to be or not.

There's also ChurchOS, which is one of a growing number of companies specializing in making websites for churches.

To expand their reach, pastors have embraced live-streaming, according to Hunter. A church in Sacramento with less than a 1,000 members can pay ChurchStreaming.tv $199 a month and tell congregants in Toledo to watch the sermon from their smarphones.

A more common technology that's increasingly making its way into church is the mobile payment app. Yes, tithing can now be done via iPhone or Android.

Dean Sweetman was a long-time pastor in Atlanta who moved out to Los Angeles last year to launch Tithe.ly. His app allows congregants to donate via their smartphones from their pews or from their beds at home on a Sunday. It charges $0.30 and 2.9% of each donation.

Sweetman says the idea for his company came from his own time as a pastor trying to make sure the bills got paid.

"Most church revenue comes in on a Sunday. You have one shot," he said. "You're lucky if a church member comes twice a month. And if they're not there, they're probably not contributing."

Notably, for a church that's using his app, it doesn't matter where its parishioners are on Sundays. Their donations go the same place: the church.

Obviously, Christians aren't the only believers with software.

For Jews looking for a quick way to pray, they can download Synagogue app for Android. Its description says "no matter what country you are in, open the Synagogue application, place yourself on the map or enter the address of your choice and find the nearest synagogue."

Muslims need to pray five times a day and face Mecca when they do. My Mosque helps them do it right, by pointing them in the right direction.

Not everyone's singing Kumbaya

The names of companies in the space (many begin with "Church", for example) underscore the fact that tech designed for churches is really for churches.

"Many have statements of faith and will not work with Mormon, Jehovah's Witness, Christian Science, Islam, Hindu, etcetera or other churches," said Church Tech Today's Lauren Hunter of religious-focused tech startups.

For Mangrove Capital Partners, the controversies and pitfalls of religious-focused company didn't dissuade them from investing.

Michael Jackson of Mangrove said his investment made sense for a lot of reasons. ChurchDesk is already used in more than 600 of Denmark's 1,000 churches, Jackson said, demonstrating to him that the company's software has already proven itself, albeit in a very small country.

Jackson's $2 million investment into ChurchDesk will be used, in part, to expand its market throughout Europe. Europe has a lot of churches and they want tech, said Jackson, explaining Mangrove's bet.

Still, Jackson acknowledges that his decision to back a company that serves customers' whose traditional income stream has come once a week via a basket -- and maybe a little guilt -- did raise some questions.

"People say to me, 'The church? They don't have any money do they?'" recounted Jackson. "The reason they're pretty successful is they are pretty good at getting nickels out of people."

So has Mangrove's backing of ChurchDesk changed any hearts and minds in Silicon Valley?

Actually, maybe.

Asked if he'd ever consider investing in a startup in the religion biz, Sam Altman -- president of Y Combinator and an investor in companies such as AirBnB and DropBox -- didn't rule it out.

"Why not!" said Altman, who explained what he looks for in an investment: smart people and a company capable of being a $10 billion business.

A religious-focused startup could fit that, Altman said. But there's one area in the space he wouldn't go:

"I would never invest in something for televangelists."

F-U-N-D-E-D is a regular column looking -- and sometimes laughing -- at what Silicon Valley has backed in the last week.