Kiva & Web2.0 Bennett Grassano Director of Development Kiva www.kiva.org "Revolutionising how donors and lenders in the US are connecting with small entrepreneurs in developing countries”
Huge Untapped Demand for Financial Services Current MFI Clients (1) vs. Total Potential Market (2 )
Kiva 101 Internet Lender Online marketplace Local Partner (MFI) Entrepreneur Money Information
500,000 social investors have lent $75 million in first 3.5 years <ul><li>Other Key Stats </li></ul><ul><li>Growth: $1M loans every 10 days. </li></ul><ul><li>Risk: 3.5% delinquency rate / < 2% default rate </li></ul><ul><li>MFI Portfolio: 110 MFIs in 44 countries. Adding 3/month. </li></ul><ul><li>Traffic: 100,000 unique site visitors a week. </li></ul><ul><li>Organization: 3 yrs old / 35 employees / +400 volunteers </li></ul><ul><li>Leverage: Platform raises $8 in loans for every $1 donated. </li></ul>
Who are Kiva’s MFI partners? Kiva currently is partnering with 110 MFIs in 44 countries Geographical Disbursement of Current Kiva MFI partners Nicaragua Honduras Togo Senegal Bulgaria Gaza Uganda Kenya Tanzania Cambodia Samoa Mexico Ecuador Nigeria Ghana Mozambique Ukraine Afghanistan DRC Indonesia Azerbaijan Cameroon Tajikistan Bolivia Haiti Dominican Republic Vietnam Iraq Peru Paraguay Guatemala Sierra Leone Cote d’Ivoire Pakistan Nepal Moldova Lebanon South Sudan Bosnia Mongolia Philippines Kyrgyzstan
Small country, Big Impact <ul><li>The Netherlands ranks 8 th among Kiva lender countries </li></ul>
+200 million brand impressions in first 30 months "Revolutionizing how donors and lenders in the US are connecting with small entrepreneurs in developing countries”
Benefits to Borrowers <ul><li>Micro-business Loan- $475 loan through Kiva to purchase Refrigerator to store larger batches of Peanut Butter </li></ul><ul><li>Increased Income – Able to make bigger batches, sell more </li></ul><ul><li>Hired an additional employee </li></ul><ul><li>Increased Savings – Saved profits </li></ul><ul><li>Purchased Land - Used savings to buy small plot of land for her family </li></ul><ul><li>Positive Example – Viewed as a success and positive role model in her community </li></ul>Grace’s Peanut Butter Featured in PBS Frontline World video: “A little goes a long way.” http://www.pbs.org/frontlineworld/stories/uganda601/index.html
Benefits to Lenders <ul><li>Low barrier to entry - $25 minimum, easy click-to-lend user experience </li></ul><ul><li>Re-loan option – allows even small investors to be long-term players (Great donation vs. poor investment) </li></ul><ul><li>Transparency – Know where your money is going. Create one instance of change. </li></ul><ul><li>Sense of connectedness – Journals tell stories of how loans have affected people’s lives. Loans connect lenders to realities of life in poor countries. </li></ul>
Kiva utilizes 5 “Web 2.0” principles <ul><li>Create an “ Addictive ” User Experience </li></ul><ul><li>Be “ Radically Transparent ” </li></ul><ul><li>“ Crowdsource ” against constraints </li></ul><ul><li>Build in “ increasing returns on data ” </li></ul><ul><li>Reach “ The Long Tail ” </li></ul>
Create an “Addictive” User Experience <ul><li>“ Addictive” = Easy + Fun </li></ul>
How Kiva tries to make it “Easy” Designed for everyday people, not affluent experts “ I can see the person I’m lending to…” Low cost to entry Business relationship based on mutual dignity, not pity Quick and easy checkout
How Kiva tries to make it “Fun” Rich user generated content, changing fast... Loans are fully funded in <24hrs (MFI staff love this)… Transactions happen every 31 seconds… Real time un-edited progress updates from around the world… ‘ Popular’ entrepreneurs rapidly rise to the top… Randomized “1 minute of fame “ for Lenders…
Results: +500,000 lenders from +160 countries in 3.5 years… How Kiva tries to make it “Fun” My Page, My Portfolio… “ My Page” encourages self expression, evangelism and loyalty… “ My Portfolio” concept encourages further lending, risk diversification and inter-lender competition…
For some, Kiva is becoming very addictive! KivaFriends.org – unofficial Kiva community forum (built by our users) Several results when searching for the word: “ Addicted ”
Be ‘Radically Transparent’ Transparency Authenticity Trust
Kiva and Radical Transparency Paying for Kiva’s overhead is an explicit choice Results: 7 out of 10 users pay an additional 10% to cover Kiva’s cost. Kiva reached 70% self-sufficiency in year 2.
Kiva and Radical Transparency Data inaccuracy and defaults are made explicit Results: 3% delinquency rate. 3% refund rate. 2% default rate.
“ Crowdsource” against constraints Big constraint? + No resources? = Crowdsource?
Kiva and “Crowdsourcing” Kiva Fellows Program How do we train MFIs, gather progress updates and verify data accuracy hyper-fast?
Kiva and “Crowdsourcing” Kiva Translator Program How do we immediately translate entrepreneur profiles from native language to English?
Kiva and “Crowdsourcing” We have little money, but great partners! Free payment processing and employee support 120 Million free banner impressions Free Google Adwords – 25% of traffic Free Yahoo Search Marketing and employee support Free promotion (Community Impact Award) Funding for Field Research and Development Free phones for cell based data upload pilot Free promotion of Kiva widget to bloggers Free computers and early funder
Build in “Increasing Returns on Data” Leading public platform + Data integrity “ Increasing Returns on Data”
Result: 30,245,763 loans found Kiva and “Increasing Returns on Data” World’s largest DB of microfinance investments Long Term : Entrepreneurs could use Kiva as a public credit bureau… Short Term : MFIs could use Kiva to build credit worthiness to other funders…
Kiva can uniquely reach the microfinance ‘long tail’ Tier I (e.g. Grameen Bank) ----- Tier IV (e.g. church congregation) Current distribution of funds in microfinance The Internet is a promising way to reduce costs and distribute risk in investing in smaller (Tier II - Tier IV) Microfinance Institutions. Could Kiva help discover and scale the next Grameen Bank? <ul><li>Kiva’s platform can aggregate and deliver risk capital unlike any commercial source </li></ul><ul><li>Kiva lenders value social return / tolerate risk more than institutions </li></ul><ul><li>$25 investments size ensures risk distribution across thousands of investors </li></ul><ul><li>Less established MFIs can build a reputation slowly over time (like on eBay) </li></ul>