LinkedIn's Reid Hoffman Lets 40,000 People Borrow His Fortune

Didn't get in on the LinkedIn IPO last year? Here's another way to get your hands on the proceeds: Sign up for Kiva, a Web site that lets people make direct loans to entrepreneurs in poor countries, and LinkedIn founder Reid Hoffman will give you a $25 credit to use on the site.

Hoffman recently loaned Kiva $1 million and invited 40,000 people to each lend out $25 of his money to a borrower of their choice, using the Kiva platform, at no cost. Since the program went live on March 12, 35,000 people have signed up, loaning out more than $875,000 to store owners in Kenya, farmers in Peru and scores of other impoverished entrepreneurs in more than 50 countries. (It's not too late: Click here to sign up for one of the remaining $25 credits.)

This is the first time Kiva has given its users the ability to lend out an individual's personal wealth. Already, the site has seen a monthly record 43,000 new users sign up for the service in March.

Some of those new users have lent their own money on top of the $25 of Hoffman's money, totaling roughly $110,000 so far. The add-on funds suggest that the program is having a larger effect than if Hoffman had just handed over the $1 million to Kiva and relied on the site to dole out the loans. (There's past evidence the concept works: A previous program that Kiva ran in August, which offered new users lending credits, turned 14 percent of those new users into regular lenders, who ended up lending out their own money through the site.)

Kiva has seen a 98.9 percent repayment rate on the roughly $295 million of loans it has facilitated since the site launched in 2005. So chances are Hoffman will get back around $989,000, at which point he'll have the option to re-lend the money, donate it to Kiva or withdraw the funds entirely. The same rules apply to all Kiva lenders.

Hoffman, who sits on Kiva's board, told TechCrunch that the idea behind the program is to take funding techniques he's seen work in the private sector and apply them to the non-profit world. “The best ideas and the most successful ventures depend upon that initial spark from angel investors,” Hoffman said in an email to HuffPost. “Thousands of people are joining in this effort as angel lenders to ensure that the spirit and promise of entrepreneurship can be realized in even the most remote villages.”

Premal Shah, Kiva's founder, said in an email that "other generous supporters are following in Reid’s footsteps.”

Since the Hoffman program went live, Kiva has seen a 544 percent increase in Facebook "shares" over the previous month, the company said.

As New York Times columnist David Carr noted recently, digital activism like sharing cause-related content on Facebook generates social currency for the people who do the sharing at no cost to them. A difference, however, between regular Facebook "likes" and Twitter hashtags, is the Kiva-inspired shares actually represent real currency.

Comments

[dressesstop]

10:36 PM on 04/01/2012

At Recovery Development Group we are looking at a new program that goes into partnership with people with weddingbridal.us shared risk and shared profits.How many people do you know whose life turned around because they got a new credit card? Good answers...

[Itsbeenalongday]

10:20 PM on 03/28/2012

According to the KIVA website, the people who take out a loan from their sources will pay it back with an average 37% interest.

For $25 you too can provide funding to a loan shark.

[Itsbeenalongday]

12:09 PM on 03/28/2012

I have issue with providing debt to poor people, less than twenty percent are able to repay from any enterprise the might start with it. For the rest they need to take second jobs or sell off some of their assets. In extreme cases in India there have been mass suicides due to the debt.

At Recovery Development Group we are looking at a new program that goes into partnership with people with shared risk and shared profits.

In our view, not every one is an entrepreneur yet micro finance makes the assumption they are.

How many people do you know whose life turned around because they got a new credit card?

[Cerulean1299]

05:49 AM on 03/28/2012

That is a nice gesture. Good for him. Maybe I will invest too.

[giftoflife898]

04:31 PM on 03/27/2012

Wow great news for the rest of the world. Too bad US.

[ihuber1]

04:15 PM on 03/27/2012

$25.00??? that won't even buy a 1/4 tank of gas.

[frank day]

04:21 PM on 03/27/2012

But it will buy seeds for a farmer in Zimbabwe.

[ewj1]

05:47 PM on 03/27/2012

it will buy seeds or a solar oven or extra eggs. We all do survive on oil.

[Gussy2000]

04:05 PM on 03/27/2012

Pick and snipe st this all you want, ultimately it was a very humane thing he did here. Not crazy about Linked In, but this eas pretty great. Kudos.

[quixmar]

03:47 PM on 03/27/2012

Getting seed money in the US is difficult. I have a multi-million dollar business idea in mind, and cannot get a "programming company" to partner with me. They calim to be too busy, and pointed me to "Venture Capitalists" which to me is not a good idea since they maintain close ties to your operation, then offer your company up for sale to make their money + interest back in addition to a "piece of the action.".

[ewj1]

05:48 PM on 03/27/2012

Try kickstarter i know a dozen people who have been successful

[quixmar]

08:56 PM on 03/27/2012

Thanks for the advise. I'll look into it.

[ewj1]

05:55 PM on 03/27/2012

People do not get funding for only 1 of three reasons:
You ask the wrong people.
The idea is not good.
People do not think you can pull it off.

[quixmar]

09:00 PM on 03/27/2012

I agree with what you are saying.
I need a programmer to put something together so I can trademark/copyright the service.
Maybe the wrong people but I went straight to programming companies that "do it all" and offered a piece of the action. The idea can be pulled off and is good because it will become a necessity to commerce in the US I would say within 15 years for sure. I want to have it in place before it becomes a necessity.

Again, thanks.

[taylor3333]

02:30 PM on 03/27/2012

Linkedin is Linke-lame

[obamavet]

02:20 PM on 03/27/2012

How about some seed money for poor business owners in this country?

[missbradford]

02:41 PM on 03/27/2012

Kiva makes loans in the US

[ewj1]

05:50 PM on 03/27/2012

try kickstarter or gogetfunding. I have invested in both of those.

[aceshigh11]

02:18 PM on 03/27/2012

I've got to say, LinkedIn is pretty awesome.

I absolutely REFUSE to use Facebook in any way, shape, or form, but I find LinkedIn to be very useful, since it is strictly in the professional realm.

I've connected with a lot of old colleagues and people from college. Its expansion over the last few years has been pretty great.

[J-Glo]

02:07 PM on 03/27/2012

You mean people actually use LinkedIn? Weird.

[librarianesque]

01:45 PM on 03/27/2012

Forget your fortune Reid, all I really want is free InMail. Think you could hook a sister up?