If you are someone who has even a remote interest in microfinance or microcredit, chances are that you know about Kiva. Matt Flannery explains the story of Kiva’s creation and also tosses in some of the ideas at the Annual Entrepreneurship Program Forum at Brown University. The good folks at the Brown’s entrepreneurship program, decided to publish the video here.
What is missing in this video is the amount of effort involved by both Matt and Jessica to start Kiva. Some parts of the video that I found interesting (my notes in the sub-points)
- Write an idea every day. Write a business plan everyday. Atleast talk to someone who understands how passionate you are, who can shoot your plans down.
- Yes, there are specific qualities in people who do that. Ask my good friend Mads and he will be glad to tutor you in those 😀
- Matt started a simple portal who can allow people fund small entrepreneurs.
- So, not all big ideas need to start as serving a big purpose. It could be something that helped you in doing something easily.
- The better the idea it is – the more contrarian the feedback is; the converse more often than not is not true !
- While you start, you are strongly affected by others’ opinion, but slowly you will develop the confidence to fight that.
- Of course, being foolhardy doesn’t help – and that is a very important thing to note
- Scalability is the big concern in a venture like this
- There is a whole legal issue about the legality of lending money to people over the Internet internationally
- A big shift in thought process is to see these entrepreneurs in Africa as business partners rather than someone who live off charity. People find it wrong to do business with those in need.
- I think this is definitely an interesting point. Even though, people find it wrong to do that, in most of the cases, I think, helping people get back on their feet is more important than merely letting them live off donations. And those receiving will be a lot more confident of bettering their lives if they do something on their own
- The difference between traditional business marketing and how Kiva got marketed was that it was all viral. Bloggers started blogging about it and slowly the word spread
- The most important barrier between you and success / scalability is inactivity. Just get the business out !
- (Apparently) Most people in the world work for themselves
- Estimated about 100 million people have been reached, and there is another 500 million people to be reached
- Zero percent loans only, due to the legal restrictions. They became a non-profit. The borrowers though are charged interest. This is to ensure that the MFI is sustainable.
- This is an important thing for the whole system to work. Even though the lender doesn’t get any return on the investment, the borrower still does need to pay the interest on the loan. This is to ensure that there borrowers treat the loan as what it is – a loan
- How does Kiva survive – it survives because people are given an option to donate to Kiva, and that is how they make money; around 70-80 thousand dollars a month
- Delinquency rate of around 6% and a default rate of around 3%
- Sometimes external events can also effect your business in a very positive way.
- Mohammad Yunus winning the Nobel peace prize got Kiva front page press, and it furthered their cause. A positive correlation event !
- Funds are transferred using paypal by the lenders. All this money is then consolidated and sent to the MFI over a wire-transfer
- It is the NGO which is rated, not the individual
- This simple thing makes sure NGOs pick individuals that they think can repay the loans. This saves Kiva a lot of effort in trying to pick borrowers.
It definitely is an interesting video about how a software programmer in Tivo decided to take a sabbatical and then created a simple site that helps people rebuild their lives. The idea is not new, but the implementation was and that is what made Kiva different.
Continuing on the theme, there are two organizations that I know of – RangDe and DhanaX that do the same thing in India. I have been following the developments of RangDe for a while now. Am not sure of DhanaX. If you are interested, please check out their site and make a small contribution to a small entrepreneur in India. And do remember to check RangDe’s blog.