Entrepreneurs know that a small influx of cash can really make a difference in their small business – and this is no less true for entrepreneurs in developing countries. Entrepreneurs living in countries facing poverty have a greater chance of success when they only have to worry about repaying a microfinance loan of a couple of hundred dollars, rather than a traditional loan of thousands of dollars. Not to mention, sometimes they only need a small amount of money to get their business off the ground.
In 2005, a young couple in their late twenties, Matt Flannery and Jessica Jackley Flannery, took the first steps in creating a pioneering internet-based microfinance solution. Two years before, they had attended a lecture by the founder of the Bangladesh-based microfinance company Grameen Bank. This talk inspired the couple and Jessica began consulting for Village Enterprise fund, a non-profit organization that helped to start small business in eastern Africa. In Africa, the couple interviewed several local entrepreneurs about the problems they faced in starting and growing their small businesses. They found that lack of access to start-up capital was a significant issue for the African entrepreneurs they spoke to. They returned from Africa determined to create a unique and innovative microfinance solution for entrepreneurs like the ones they had met.
The seeds for Kiva had been planted. Kiva, which is a Swahili word for “unity,” became the couple’s top priority. They believed that the microfinance process should be as easy as possible for both lenders and borrowers. They set out to create the world’s first online microlending platform.
Kiva was a hobby side project until a popular blog wrote a feature about it, which led to increased attention. They received an outpouring of feedback and support, which made them realize just how much they could scale Kiva. They both left their day jobs to concentrate on building the business, which combined their two career goals: technology for Matt and microfinance for Jessica.
Kiva is truly groundbreaking. Its website facilitates microloans, starting at $25. This is done through their Field Partners, existing microfinance institutions around the world, who collect local entrepreneur stories and needs and upload them on Kiva’s website. Then, lenders from all over the world browse profiles and lend to those they would like to fund. The relevant Field Partner disburses this loan and also collects repayments of the loan. Absolutely anybody can become a lender – all they need is an email account and credit card or PayPal account. Kiva is also the first organization which holds a free payment processing agreement, meaning 100% of all loan amounts reach their intended entrepreneurs.
At the time of writing, Kiva has 1,430,510 users. About 942,000 of these users have made a loan to 1,055,907 entrepreneurs. The total value of all loans has been nearly $440 million USD. Perhaps the most remarkable fact of all, however, is that Kiva has facilitated loans within and between countries commonly perceived as “developing” – in a recent interview, Matt notes there have been loans within Mexico, and from India to Cambodia.
Thanks to their forward thinking and application of technology to the current microfinance universe, Kiva empowers entrepreneurs in need, and is helping to blur the lines between the developed world and the developing world.