1 november 16, 2014 kiva zip: crowdfunding to success
TRANSCRIPT
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• November 16, 2014
Kiva Zip: Crowdfunding to Success
2Agenda
Kiva Zip Introduction/Role of a Trustee
Trustee: Microfinance at Berkeley
Trustee: Germinal Fund
Q&A
3Welcome to Kiva!
Kiva leverages the internet and a worldwidenetwork of microfinance institutions to
allow individuals to lend as little as $5 to help createopportunity around the world.
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1,200,000+ Lenders
1,300,000+ Entrepreneurs
$560,000,000+Loans
99% Repayment Rate
Kiva’s Impact to Date
5In 2009…
“Why can’t I lendto someone in my
Lenders own backyard?”
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7How the Kiva Zip model is different
Lenders
Entrepreneur
In the Kiva Zip model, we send theloans directly to the entrepreneurs
8What’s the problem?
Small businesses create
U.S. jobs
2 out of 3
Small businesses hired just 1 employee
1 in 3Full employment achieved ifBanks reject
small business loan applications
7 out of 10
Access to capital
constraint to growth reported by small businesses
Top 3
9Imagine 20 aspiring entrepreneurs with 20 dreams
10Right now, traditional banks may only be serving 1…
11…CDFIs might help serve a couple more…
12With Kiva Zip, we want to light up all 20
13Kiva Zip is the first rung on the financial ladder
Just as MFIs are expanding access to entrepreneurs underservedby banks, so Kiva Zip is expanding access beyond MFIs
14We have three principle objectives for Kiva Zip
1 Increase access to capital for small businessowners who might not otherwise qualify for
microloans
2 Use technology to lower the cost of loancapital for borrowers
3 Connect Kiva’s million lenders more closelywith the borrowers they are supporting
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Lend• Support a U.S.
entrepreneur with financial and social capital.
Borrow• Access a 0% interest Kiva
Zip loan to invest in your business.
Endorse• Become a trustee
and enable an entrepreneur to access a Zip loan.
Three Aspects of Kiva Zip Model
16What a Kiva Zip Loan Offers
• Kiva Zip loans can be used for any business purpose• Purchase inventory, invest in equipment, expand product lines, hire
staff, marketing, advertising, etc.
• Small size, short term, 0% interest, crowdfunded loans.• Most first time loans are $5000 or less, subsequent loans can be up to
$25,000
• Kiva Zip borrowers must be endorsed by a trustee • An organization/individual who can vouch for their business
17Trustees
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Over 400 trustees throughout the country have endorsed one or more of their clients or community members for a Kiva Zip loan. This number is growing by 20-30 every month.
Types of trustees include:
Technical assistance providers
Non-profits
Business incubators
Small businessesReligious groupsStudent clubs
Local governmentsBusiness mentorsEtc.
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Trustees play a crucial role in the Kiva Zip model
They never handle the money…
…And they bear no financial risk in the case of loan default…
…But they are the principal means by which we: Source and vet borrowers Educate borrowers on the Kiva Zip program Follow-up on delinquencies Provide technical assistance to borrowers Reach the bottom of the pyramid
The Role of Trustees
20What do trustees do?
Trustees play two key roles on Kiva Zip:
Help us keep in contact with these entrepreneurs over the course of their
loans
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Find entrepreneurs with rock solid
character who would benefit from a 0% interest microloan
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EmpowerEnable your clients to engage with their crowd of lenders, and access interest-free capital they otherwise could not.
EngageEngage with Kiva’s network of a million lenders. Showcase your impact and build awareness of your organization.
PromoteBenefit from the positive publicity and PR that collaboration with Kiva’s brand can bring.
FundraiseDemonstrate tangible impact to potential funders in terms of loans endorsed, revenue generated, and jobs created.
What’s in it for trustees?
22Being a Trustee- Endorsement
23Being a Trustee- Fundraising 25
83 lenders
$5,000
9 days
24Over 100 Bay Area trustees have endorsed a Kiva Zip loan!
Trustee # of loans $ of loans % repayment rate
15 $78K
9 $85K
8 $38K
7 $35K
6 $31K
6 $27K
5 $32K
5 $26K
5 $4K
4 $20K
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4
$23K
$16K
94%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
100%
25Zip’s Impact
650 Borrowers – 400 Trustees – 25,000 Lenders
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Who We Are:
The Germinal Fund• The Germinal Fund is a student-run nonprofit
that serves the needs of small local businesses through a combination of microlending and hands-on training/consulting services.
Who We Are: The Germinal Fund
28What Makes a Good Borrower?
• Strong Character: Trustees should be confident in the borrower's commitment to repay the loan.
• Business Skills: Trustees should be familiar with the borrower's business plan and strongly believe in its viability. Borrowers and trustees should have a clear understanding of how the funds will be used.
• Social Impact: The borrower's business should have a positive effect on the community.• Capital begets capital.
29Successful Borrowers Have…
• Pre-determined plan: Knowing exactly where they will spend the money and how it will specifically benefit their business.
• Strong Networks: Borrowers are most successful when they have personal and professional ties to their community and a willingness to use them!
• Willingness to be positive and take an active approach: Successful borrowers fundraise and market themselves through all available outlets.
• Compelling stories and photos: Lenders are drawn to borrowers with interesting stories, great products and compelling photos.
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How to Engage Borrowers
• Key: Connecting with the community
• Canvassing
• Community and Municipal Institutions
• Referrals and Connections
How to Engage Borrowers
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Next Steps - Connecting
• Ask for their Budget: This helps determine where they are in the planning stage of the process.
• Credibility & Character: A borrowers responsiveness and responsibility are key.
• Test their Intentions: Establish next steps and give action points.
Next Steps:- Connecting
32Case Study – Whey Station
Mobile Food Truck
33Results
Successfully fundraised a $5,000 loan through Kiva Zip
Provided…New WrapParking PermitsNew GeneratorFood Smoker
34Microfinance at Berkeley
Microfinance at Berkeley is the first campus Kiva Zip Trustee. We were founded in 2012 by a Kiva Fellow and UC Berkeley student.
The Statistics
• Tier 2 Kiva Zip Trustee
• 5 Loans
• $21,500 in Loans
• 100% Repayment Rate
• 15 Members
Our Mission: We seek to provide under-served entrepreneurs with capital that may be inaccessible through traditional financial institutions.
35MFB: Our Clients
Our clients include soap makers, goat owners, international textile producers, and leather crafters.
36MFB: Client Case Study
Julianne - Faerie Goatmother
37MFB: Our Due Diligence Structure
Introduction, Application, Financial Analysis, Profile Development
1. Pre-Interview: 30 minute phone interview
2. Interview: Business Plan, Credit Report, information about business
3. Online Application: rough draft for Kiva Zip borrower profile
4. Financial Documents: sales records, bank statement, possible lenders, landscape photo for Kiva Zip profile
5. Endorsement: compelling reasons to lend
6. Profile: Loan Officer partners with client to create profile
7. Crowdfunding: 60 days – 15 day private period, 45 day public period
8. Quarterly Check-Ins:
Total time required to put a client online: 6-8 weeks
38MFB: Referrals through Partnerships
Berkeley Chamber of Commerce: Diane Rames
Berkeley Office of Economic Development: Elizabeth Garcia
39MFB: Outreach Events
Visit local farmer’s markets, pop-up markets, and other events to meet entrepreneurs and spread awareness about microfinance.
40MFB: Sign on to Listserves
Follow local start-up incubators, government agencies, and hackathons to stay updated on events and ways to connect with entrepreneurs.
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“Student,” “Volunteer,” and “Nonprofit” are terms that will lend you legitimacy.
MFB: Challenge 1 – Establishing Credibility
When starting out as a Trustee, it is key to establish your credibility, and Kiva Zip’s credibility as a program that provides 0% interest $5000 loans.
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The Kiva Platform gives borrowers access to over 1 million lenders, all of which are interested in supporting social enterprises and new businesses.
MFB: Challenge 2 – Pitching the Loan
Online Marketing Potential Customers Social Media Expertise
Supporters: Special Forces Grade
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Lending Teams are targeted, pool many members’ funds, and can launch a borrower’s crowdfunding campaign or finance it to 100%.
MFB: Challenge 3 – Funding the Campaign
Lending Teams are cohorts of lenders who band together based on common backgrounds, geographic focus, passion for a social cause, industry, or any other shared lending goal.
Lending Teams are a function of Kiva, but Lending Teams can also make loans to Kiva Zip borrowers. Get in contact with the Lending Team Captains and request that they spotlight your client.
44Q&A
Any questions?
45
g
Sarah Taylor
Esther Han
Thank you!
Jason Brandner