Breaking the Mold . . . and Maybe the Rules
Challenging regulation and convention while creating new models in an unprecedented market
|Mads Kjaer||Matt Flannery|
Microfinance has been growing steadily over the last 30 years, most quickly in the last 10. Even the definition of “microfinance” has expanded. Different types of microfinance institutions (MFIs) have been created, and a variety of microfinance investment vehicles (MIVs) have been formed. Both the universes of institutional and individual investors/donors have grown. One development that is increasing the number of microfinance investors and working to reach more microborrowers is peer-to-peer (P2P) microlending platforms.
MYC4, based in Copenhagen, and Kiva, based in San Francisco, are two of the first online marketplaces that connect individual investors with individual entrepreneurs who need capital. MYC4 lets individuals bid an amount and an interest rate to fund a portion of a microloan. Kiva allows individuals to lend money at 0% interest in $25 increments to microentrepreneurs. Both companies use the internet to connect investors & lenders with entrepreneurs and, in doing so, are helping to bring new scale to both sides of the microfinance equation. As Kiva and MYC4 have forged new territory in the fields of microfinance and SME (small and medium-sized enterprise) development, investment, and philanthropy, they have faced regulatory hurdles and continue to raise new questions. With new business models, these two companies are forcing regulators, banks, and MFIs to expand their thinking . . . and maybe their rules. When a practice is unprecedented, how do we know if it is legal? How should foreign exchange and default risk be handled? What value can P2P platforms provide borrowers in addition to loans? MYC4 Co-Founder and CEO Mads Kjaer and Kiva Co-Founder & CEO Matt Flannery will discuss challenges they have faced and issues they are addressing as each of their companies continues to develop their own innovative financing model.
Mads Kjær is Co-Founder and CEO of MYC4, a web-based marketplace for African entrepreneurs to find funding to grow their micro- and small businesses, and for investors globally to invest in them. The vision of MYC4 is to end poverty through business by ensuring that everyone has the same access to capital and knowledge. MYC4 publicly launched the marketplace in October 2008, and today 4,000 entrepreneurs in 7 African countries have received loans for 8 million Euro. Mads is the former CEO and now Chairman of Kjaer Group and has 25 years of professional experience with the African continent. Mads has expatriated to Zimbabwe, Uganda and South Africa, and provides MYC4 substantial insight into African business. Mads Kjær is also the Honorary Consul for Ethiopia in Denmark.
Matt Flannery is the Co-founder and CEO of Kiva, the world's first person-to-person micro-lending website, empowering individuals to lend directly to unique entrepreneurs around the globe. Matt began developing Kiva in late 2004 as a side-project with while working as a computer programmer at TiVo, Inc. In December 2005 Matt left his job to devote himself to Kiva full-time. As CEO, Matt has led Kiva's growth from a pilot project to an established online service with partnerships across the globe and millions in dollars loaned to low income entrepreneurs. Matt is a Draper Richards Fellow and a featured blogger on the Skoll Foundation's Social Edge website. He graduated with a BS in Symbolic Systems and a Masters in Analytical Philosophy from Stanford University.