INDIRECT PERSON TO
PERSON (P2P) PLATFORMS
Tim Hassett
VP Kiva
Overview
•
•
•
•
•
•
•

Crowd Funding has Arrived
Crowd Funding Microfinance
Indirect P2P Market
Global Impact of Indirect...
Crowd Funding has Arrived
Raising large amounts of social capital through
small sums from many people
• Network for Good h...
Crowd Funding Microfinance
“Person to Person Lending, Is Financial
Democracy a Click Away?” USAID Sept 2008
• Direct – Bor...
Connected Capital

Photo Credit: Connecting Dotz
Indirect P2P Market
Platform

Kiva
MyC4
Babyloan
RangDe
MyELEN
TOTAL

Loans Funded
($000)
Q1/2011
$210,000
18,000
2,300
1,...
Different Models

From Survey of 24 Institutions

Financial Returns for Lenders
– 20 provide no return to lenders
– MyC4 i...
Different Models

From Survey of 24 Platforms

Borrower Risk
Yes

No

Partner Risk
No

Babyloan
MicroWorld

Lend for Peace...
Global Impact of Platforms
Provide early capital to help Field Partners scale
– Tier 2-4 MFIs
– Risk Transfer allows for p...
Advantages & Disadvantages
Advantages
• Attractive Source of Funding
– Low cost
– Risk Transfer

• Public Relations and ab...
Future Evolution of Sector
Larger SME Loans
– Able to finance the “missing middle”

Insurance Products
– Risk Transfer alr...
Questions
• How large will this market sector grow in the
future?
• Does differentiation among platforms add
benefit for M...
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T hassett

  1. 1. INDIRECT PERSON TO PERSON (P2P) PLATFORMS Tim Hassett VP Kiva
  2. 2. Overview • • • • • • • Crowd Funding has Arrived Crowd Funding Microfinance Indirect P2P Market Global Impact of Indirect P2P Market Advantages & Disadvantages with Platforms Future of Indirect P2P Market Questions to Consider
  3. 3. Crowd Funding has Arrived Raising large amounts of social capital through small sums from many people • Network for Good has raised over $500M • Direct P2P has raised over $500M • Zopa • Prosper • Lending Club • Indirect P2P has raised over $250M
  4. 4. Crowd Funding Microfinance “Person to Person Lending, Is Financial Democracy a Click Away?” USAID Sept 2008 • Direct – Borrower posts loans directly to platform • Indirect – Borrower is posted by a Field Partner • Microplace – Notes from Issuers Sold
  5. 5. Connected Capital Photo Credit: Connecting Dotz
  6. 6. Indirect P2P Market Platform Kiva MyC4 Babyloan RangDe MyELEN TOTAL Loans Funded ($000) Q1/2011 $210,000 18,000 2,300 1,000 900 $232,200
  7. 7. Different Models From Survey of 24 Institutions Financial Returns for Lenders – 20 provide no return to lenders – MyC4 is largest platform offering returns Regional Focus – 11 are global (Kiva) & 13 regional (Wokai) Specialized Loan Products – 6 specialize in certain loan products • Vittana for Student Loans • Energy in Common for Green Energy Loans
  8. 8. Different Models From Survey of 24 Platforms Borrower Risk Yes No Partner Risk No Babyloan MicroWorld Lend for Peace Zafen Yes Deki Energy in Common Good Return Kiva MyC4 Vittana Rang De (proportions of defaults covered by a Contingency Fund) United Prosperity Xetic
  9. 9. Global Impact of Platforms Provide early capital to help Field Partners scale – Tier 2-4 MFIs – Risk Transfer allows for product innovation that may not be possible with commercial capital Stimulate product innovation – Risk Tolerant and Low Cost Capital – Vittana and Energy In Common Education Vehicle for Lenders – Connection Caring Engagement
  10. 10. Advantages & Disadvantages Advantages • Attractive Source of Funding – Low cost – Risk Transfer • Public Relations and ability to share best practices • Ability to innovate when borrower risk is transferred to lenders Disadvantages • Foreign Currency Loans – 9 of 24 Platforms lend in foreign currency • Higher Operating Costs • Challenges to Borrower Privacy • Liquidity Concerns – Many Platforms require monthly repayments
  11. 11. Future Evolution of Sector Larger SME Loans – Able to finance the “missing middle” Insurance Products – Risk Transfer already entails credit insurance – Crop or Business Interruption Insurance could be appealing to lenders Individual Development Accounts – Lenders could match savings after pre-determined criteria were achieved
  12. 12. Questions • How large will this market sector grow in the future? • Does differentiation among platforms add benefit for MFIs or does it create confusion? • Should there be an accreditation of Indirect P2P Platforms? – Protecting Lenders – Providing information to Field Partners
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