Number of Employees: 5
Based In: Santa Monica, California
Founded: 2009
Funded By: Self-funded
Audacious Five-Year Plan: To become the global leader in "micro-equity"
Intended to help struggling entrepreneurs, microfinance loans can end up being a burden. A new nonprofit wants to offer startups that have previously borrowed from microfinance providers with interest-free funds -- on the condition they reinvest in their community.
"The fact is, a microfinance client is not going to take risks with their business or be incredibly creative in selling their products because they are so concerned with repaying their loans and the interest on them every two weeks or every month," says Shivani Siroya, who in late 2009 founded
InVenture Fund, a firm that calls itself a "micro-venture capital fund."
InVenture's clients are existing microfinance borrowers with a proven track record -- they've been taking out micro-loans for at least 3-5 years and they have at least a 98 percent repayment rate. "Traditional microfinance is really for the startups or for early stage companies," explains Siroya, "but we're working with businesses not to start, but to expand."
InVenture lets anyone contribute "micro-investments" to entrepreneurs who get the funds as interest-free loans. Without the burden of interest payments eating into their profits, struggling entrepreneurs can focus on how to "expand their business into new territories, and create a marketplace where others can succeed." The latter is accomplished by requiring InVenture's clients to reinvest 5 percent of their profits back into their local community in such areas as clean water and education. (Investors who are repaid by InVenture clients can either re-invest in other businesses or put their money back into the original business.) "Good capital can grow businesses, and good businesses can grow communities,"
Siroya points out.
To test the model, the InVenture team invested its own capital in 35 entrepreneurs in communities in Ghana, Mali and India. Over the last six months, all of the entrepreneurs they invested with have paid back the principal, generated a profit and reinvested 5 percent of their profits back into their community. With the first three pilot programs complete, the InVenture team has moved on to Mexico and is now using everyday people to help them with its model.
Today, anyone can use InVenture's
web platform to lend as little as $25 to entrepreneurs like Griselda Flores, who runs a "highly profitable" medical analysis lab clinic in Milpa Alta, Mexico, or Armando Saavedra, who runs an eco-friendly flower business in Mexico City. "People can be directly invested with these business owners. So now you're a part of that success story, and when a business owner makes profit you get your money back." And in the not too distant future Siroya plans to launch a U.S. pilot. -- Nathaniel Cahners Hindman
Submitted by HuffPost User:
teefeena:
InVenture Fund (www.inventurefund.org) is an online platform that connects socially conscious investors to entrepreneurs in under-served communities. Their theory of change is simple: Give entrepreneurs the resources for real financial and social growth, and they'll lift not just themselves but their communities out of poverty.
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First Posted: 07/22/10 02:40 PM ET Updated: 05/25/11 06:10 PM ET