NB Financial Health
Vittana to “cease to exist as a standalone organization”: The education-focused P2P microlender will wind down in its current form, its CEO says
Modeled after Kiva, the Seattle-based Vittana was created in 2008 to help student microloan borrowers directly connect with individual lenders. It was co-founded by Kushal Chakrabarti, who developed the personalized recommendations engine at Amazon, along with Brett Witt, an infrastructure architect at energy finance firm Opower.
According to its 2013 audited financial statement, Vittana’s partner microfinance institutions (MFI’s) are responsible for meeting with students, disbursing microloans and collecting repayments. Vittana’s role was to provide capital to the MFIs. Two years ago, Vittana also partnered directly with Kiva Microfunds. The relationship enabled Vittana to raise funds for student loans on behalf of its microfinance partners on Kiva’s peer-to-peer lending platform, according to its financial statement.
Vittana also received large donations from venture capital and tech luminaries like Vinod Khosla and Zillow co-founder Rich Barton, according to Geekwire. But that seed money never took root with a strong business model.
“Vittana has never been a conventional charity. One of our founding beliefs was that once we reached scale, we could do our work sustainably, without shifting costs and risk onto the students,” wrote CEO Robin Wolander in announcing Vittana’s wind-down. “We have had wonderful donors support this effort but after five years and a few different approaches, we haven’t found a robust business model to wean ourselves off that support. We want to be true to our original promises that we would not be philanthropically funded forever.”
Vittana currently works in 17 countries with 35 MFI partners, but will not begin new programs, Wolander explained, adding that the organization is looking into how it could spin off some of its current programs to other organizations.
Vittana worked to provide loans to more than 19,000 students, with typical student educational loans ranging from $500 to $1,500, and most lenders contributing smaller increments of the total loan. The typical recipient is between 18 to 25 years of age and it takes six to 24 months to fully repay the loan. Vittana provided profiles of the students, allowing would-be lenders to browse multiple borrowers and track their progress toward their financial goals.
NextBillion first wrote about Vittana about 18 months after its launch. Here’s what contributor Manuel Bueno had to say at the time about Vittana’s aspirations:
Many of the ingredients required to develop student micro-loans are not as similar to standard microfinance practices as one could expect. For example, instead of lending to groups of individuals, Vittana suggests that mothers of prospective borrowers should co-sign the loan. Moreover, the ideal student-borrower is a high school graduate wanting to enroll in a vocational school to acquire a set of skills that will allow him or her to find formal employment. The majority of the “best” student-borrowers are often the children of successful previous microfinance borrowers, to whom MFIs have easy access and about whom they have good financial information. Therefore, finding successful and efficient MFIs is crucial in order to gain scale and fine-tune the loan product to specific regional circumstances.
Wolander said lenders can access their accounts at http://my.vittana.org/login — and withdraw credit balances, or donate future repayments.
Scott Anderson is NextBillion’s managing editor.