"The most valuable commodity I know of is information."
rebelutionary / 2.0
Kiva is truly extraordinary
Today is a momentous day. I received the first repayment against one of my loans at Kiva - $2.09.
You might say my investment in Vicente Zumba's shoe store in Ecuador is paying dividends.
You might just be wondering how the hell I managed to invest in a shoe store in Ecuador anyway - and you'd be right.
As I've enthusiastically regaled more than one close friend in the last month, Kiva is my favourite "Web 2.0" business. Not because of the Ajax, because of what it can do. It's what I'd call microloans "done right". It takes a few ingredients from Flickr, one or two from Blogger and mixes them together with a non-profit microfinance model to create an incredibly powerful (and empowering) idea.
The basic process is as follows:
- you put money into Kiva (which is itself a non-profit, based in San Francisco I believe) using PayPal. As much or as little as you want.
- you then browse the series of businesses around the world which have applied for money, and been vetted by local staff in their country as viable
- find one you like, and contribute as little as $25 to the loan, along with a host of other lenders. Each loan is usually spread out over about 25 or more lenders from my experience, see Mr Zumba's lenders (flickr anyone?)
- the money is aggregated, lent to the business which spends it - in Mr Zumba's case, he bought more inventory and two new display cases for shoes
- the recipient can then write a journal (ok, it's a blog) about their business as often as they like, communicating directly with the lenders.
- over time, the loan is paid back and the "profits" evenly distributed - hence Mr Zumba's $98 repayment on his $1175 loan earned me my first $2.09
I say "profits" because the entire process is non-profit. You don't earn any interest on your loans, and Kiva doesn't take a cut. The only benefit you receive is the warm feeling that you've helped someone build their business in a meaningful way with a few dollars.
You can withdraw your funds after they are repaid (if you want), but Kiva recommends that you simply re-loan them to someone else, thereby creating a virtuous circle.
Treat it as a donation that just keeps donating over time. If your loan doesn't get paid back, it was a donation. If it does, donate it again. It's a little bit about teaching men to fish, not providing them with seafood platters.
Does it work? They have around a 96% payback rate right now. From personal experience, this is my first instalment (the loan was made on Dec 06, 2006 - so that's 1 month later).
The thing I love about it is that from my desk I can help people around the world. My loan "portfolio" now includes businesses in Ecuador, Togo, Mexico, Bulgaria and Azerbaijan. A few hundred dollars of my money could either be sitting in a bank account, or helping entrepreneurs build businesses on 4 different continents, while I sit on a fifth. Who can't see power in that?
So come on. What are you waiting for? You have a credit card - why not lend $25 to an aspiring entrepreneur in Togo and see how good it makes you feel.
I'll tell you what, why don't we make this a challenge? For anyone who reads this post, signs up to Kiva and makes a loan - email me the loan details and I'll join you in the loan. Let's invest together. I can always expand my portfolio.
Follow this link and do it today. As is their slogan, make "Loans that change lives."
Be warned though - it becomes addictive.
Comments
mike, have you listened to the latest Venture Voice? -> http://www.venturevoice.com/2006/11/vv_show_41_premal_shah_of_kiva.html#more
It's with Premal Shah, the CEO of Kiva. I'm intending to try it as well after listening to his amazing interview. Micro lending is an amazing concept - the idea that it retains it's dignity since it's not a donation and payback rates are supposedly 95%... wow. it's good to hear independent validation of that. I am signing up now...
sean
What an amazing testimony of humanity! What better way to start off a new year than to be intentional about helping to heal the world! Thanks for sharing your experiences with Kiva. You've given your readers an amazing way to get connected with something worthwhile, yet so practically. You've demonstrated that one doesn't have to be a Nobel Peace Prize winner to make a different with microloans. Have an amazing year to come!
Regards,
Tim (volunteer with Kiva.org)
Hi Mike,
I saw this site a couple of weeks ago and was tempted to test the waters and so thanks for the blog post, it pushed me over the precipice and put my money on the table.
I have taken you up on your up on your offer and have invested in the following:
• Loan Purchase of $25 to Eunice Adhiambo (business id=3463)
• Loan Purchase of $25 to Messan AKOLI (business id=3533)
• Loan Purchase of $25 to Felicita Ventura (business id=3553)
Your turn now.
Cheers,
Luke
For those interested, so far I've added 10 loans to my "Kiva portfolio":http://www.kiva.org/lender/mcannonbrookes as a result of this challenge so far.
I haven't managed to get into many of the loans directly along side readers (as one put it as a "joint venture partner") - who knew their loans filled so fast?
I have faithfully added one extra loan for each one I'm told about. I have noticed a few disparate readers joining into the same loan which is fabulous. One loan had a reader from Perth, one from Norway and one from the US. True global microfinance.
Thanks to everyone - offer still open, if you loan - email me.
m
Thanks for bringing this to my attention Mike. This kicks ass! I had heard about microlenders and thought to myself: man, I would LOVE to be able to help them out. Better yet, it would be GREAT if there was a way to lend directly the entrepeneurs. Now I can. I've just lent to Vasil Mindov in Bulgaria and Maria de los Angeles Castellon in Mexico.
Just an update - thanks for all those who have since emailed me to let me know about their loans. Truly amazing to have total strangers find my blog and be moved enough to make a loan.
I have dutifully added loans for every person, I believe I'm now up around the 25 loan mark!
http://www.kiva.org/lender/mcannonbrookes
Thanks to all,
Mike
Hello,
You might be interested to know that Today's Mama.com recently announced that they will give 10% of their profits to Kiva. :) That is great! My friends, Rachael and Stephanie are the founders there and they're passionate about the cause, glad to see you are too..
Kelly
Thanks for posting this.... What an great concept taking real 2.0 value to a proven and incredibly worthy cause. This is what technology should be used for.
Inspired by this post me and my wife just made four loans on Kiva (http://www.kiva.org/lender/niklas3027). Thanks a lot for your tip!
Kiva is indeed brilliant! I immediately became a lender when I found the site quite by accident.
Please consider spreading news of the Kiva Podcast Talkathon we're doing (http://talkathon.org)
Begins Sunday March 18th at noon EST and goes for at least 24 hours.
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I'm the co-founder and CEO of Atlassian.
I live in Sydney and San Francisco. I'm an Aussie. I travel (a lot). I learn. I read. I talk. I create. I bike. I drink. I'm all in.
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Advising startups is something I've started doing in the last year. It's a fascinating way to use one's brain and experience to solve other people's problems.
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I also make a lot of small microfinance loans to entrepreneurs around the world through Kiva. Read more about my on going Kiva Challenge (update).
