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Kiva Zip: Crowdfunding to Success
November 16, 2014
Agenda
 Kiva Zip Introduction/Role of a Trustee
 Trustee: Microfinance at Berkeley
 Trustee: Germinal Fund
 Q&A
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Welcome to Kiva!
Kiva leverages the internet and a worldwide
network of microfinance institutions to
allow individuals to lend as little as $5 to help create
opportunity around the world.
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Kiva’s Impact to Date
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$560,000,000+
99%
1,200,000+
1,300,000+
Loans
Repayment Rate
Lenders
Entrepreneurs
In 2009…
Lenders
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“Why can’t I lend
to someone in my
own backyard?”
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How the Kiva Zip model is different
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Lenders
Entrepreneur
In the Kiva Zip model, we send the
loans directly to the entrepreneurs
What’s the problem?
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Small businesses create
Access to capital
2 out of 3
Top 3
U.S. jobs
constraint to growth reported
by small businesses
Banks reject
7 out of 10
small business loan applications
Full employment achieved if
1 in 3
Small businesses hired just
1 employee
Imagine 20 aspiring entrepreneurs with 20 dreams
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Right now, traditional banks may only be serving 1…
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…CDFIs might help serve a couple more…
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With Kiva Zip, we want to light up all 20
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Kiva Zip is the first rung on the financial ladder
Just as MFIs are expanding access to entrepreneurs underserved
by banks, so Kiva Zip is expanding access beyond MFIs
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We have three principle objectives for Kiva Zip
1 Increase access to capital for small business
owners who might not otherwise qualify for
microloans
2 Use technology to lower the cost of loan
capital for borrowers
3 Connect Kiva’s million lenders more closely
with the borrowers they are supporting
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Three Aspects of Kiva Zip Model
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Borrow
Lend
• Support a U.S.
entrepreneur with
financial and
social capital.
• 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.
What 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
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Trustees
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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
Business incubators
Nonprofits
Small businesses
Local governments
Religious groups
Business mentors
Student clubs
Etc.
The Role of Trustees
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
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What do trustees do?
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Trustees play two key roles on Kiva Zip:
1
2
Find entrepreneurs
with rock solid
character who would
benefit from a 0%
interest microloan
Help us keep in
contact with these
entrepreneurs over
the course of their
loans
What’s in it for trustees?
Empower
Enable your clients to engage with their crowd of lenders,
and access interest-free capital they otherwise could not.
Engage
Engage with Kiva’s network of a million lenders. Showcase
your impact and build awareness of your organization.
Promote
Benefit from the positive publicity and PR that
collaboration with Kiva’s brand can bring.
Fundraise
Demonstrate tangible impact to potential funders in terms
of loans endorsed, revenue generated, and jobs created.
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Being a Trustee- Endorsement
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Being a Trustee- Fundraising
25
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83 lenders
$5,000
9 days
Over 100 Bay Area trustees have endorsed a Kiva Zip loan!
Trustee
# of loans
$ of loans
% repayment rate
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$78K
94%
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$85K
100%
8
$38K
100%
7
$35K
100%
6
$31K
100%
6
$27K
100%
5
$32K
100%
5
$26K
100%
5
$4K
100%
4
$23K
100%
4
$20K
100%
4
$16K
100%
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Zip’s Impact
650 Borrowers – 400 Trustees – 25,000 Lenders
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Who We Are: The Germinal Fund
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.
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What 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.
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Successful 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
How to Engage Borrowers
• Key: Connecting with the community
• Canvassing
• Community and Municipal Institutions
• Referrals and Connections
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Next Steps:- Connecting
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.
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Case Study – Whey Station
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Mobile Food
Truck
Results
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Successfully fundraised a $5,000
loan through Kiva Zip
Provided…
New Wrap
Parking Permits
New Generator
Food Smoker
Microfinance at Berkeley
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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.
MFB: Our Clients
Our clients include soap makers, goat owners, international textile producers,
and leather crafters.
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MFB: Client Case Study
Julianne - Faerie Goatmother
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MFB: 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
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MFB: Referrals through Partnerships
Berkeley Chamber of Commerce: Diane Rames
Berkeley Office of Economic Development: Elizabeth Garcia
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MFB: Outreach Events
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Visit local farmer’s
markets, pop-up
markets, and other
events to meet
entrepreneurs and
spread awareness
about microfinance.
MFB: 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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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.
“Student,” “Volunteer,” and “Nonprofit” are terms that will lend you legitimacy.
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MFB: Challenge 2 – Pitching the Loan
Online Marketing
Potential Customers
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Social Media Expertise
Supporters:
Special Forces
Grade
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 3 – Funding the Campaign
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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.
Lending Teams are targeted, pool many members’ funds, and can launch a
borrower’s crowdfunding campaign or finance it to 100%.
Q&A
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Any questions?
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Thank you!
Sarah Taylor
Esther Han
sarah.taylor@fellows.kiva.org
esther.han@berkeley.edu
Jason Brandner
brandnerjason@gmail.com