Opportunity Africa: How One Social Venture Is Crowdsourcing the For-Profit Finance Model
Tuesday, October 9, 2012
The best social entrepreneurs are always tweaking the model. In microfinance, crowd-sourced ventures have aimed at connecting first world capital with developing world opportunity – and with some success. A few years ago, I met Mads Kjaer in Oxford and was fascinated by a model that added risk and reward to what had been more a form of philanthropy than investment. The venture, co-founded with partner Tim Vang, is called MYC4 and works to connect online investors with entrepreneurs in Africa. Mads is also chairman of the board of the Danish company Kjaer Group, which distributes and services cars, trucks and motorcycles in Africa – so he brought an experienced market and business background to MYC4.
One global economic meltdown later, MYC4 is taking the lessons it’s learned and forging ahead. The company is based in Copenhagen with a regional office in Nairobi, Kenya. With upwards of 380 million Africans in the world’s fastest-growing economies still lacking banking services, MYC4 is looking to fill a market need.
MYC4 was founded using a Dutch auction method for retailing loans to small and mid-sized businesses in developing countries – a crowd-sourced for-profit micro finance company with an initial presence in Africa. First off, tell us about where MYC4 stands in terms of money invested and businesses served. How are you doing?
Since we started five years back, so far over $20M has been invested in over 10,000 loans. These funds have come from over 19,000 investors/lenders. The number of businesses looking for funding on MYC4 is growing by the day and more Micro Finance Industry (MFI) partners are being recruited. Today the current outstanding loan balance has grown from 1,100 business loans equal to $1.5M USD in January, 2012 to 3,000 business loans equal to $2.5M in September. The biggest challenge facing MYC4 at the moment is lack of adequate liquidity to fund all the loan requests. This year alone, over $1M worth of loan requests has not funded. At the moment, MYC4 requires an increase of investors/lenders with a short term year end funding gap of $1M in new liquidity to fund growth.