Venture capital nudge for microfinance

Venture capital nudge for microfinance

The Seattle Times has a long article on the VC approach to microfinance, and in particular the work of Unitus.

Unitus raises a fund and looks for small microfinance banks around the world that have good management teams and large market opportunities. It helps turn the bank into a for-profit entity, then it makes an investment.The money can give the institution leverage to borrow more money from traditional banking institutions. Unitus also takes a seat on the bank’s board and provides consulting services to set up the infrastructure designed to support fast growth. With the transformation in place, Unitus expects a bank that once served 3,000 people to help 100,000 to 200,000 people in five to seven years…

To make it all work, Unitus had to create a new way it do business. It set up an equity fund that would be an affiliated for-profit entity, registered in the Cayman Islands. The fund raises money from investors who expect a return. So far, it has raised $8.5 million in investments… In all, Unitus expects to raise about $20 million…The fund’s investors are not donors; the idea is that they will get back their money and a return in a traditional way — by an investment going public or being sold…

One of the companies that Unitus has invested in is SKS, the focus of a similar WSJ article last week.

Thanks to Unitus Blog for the pointer. A good opportunity to highlight some other microfinance blogs, many of which have started within the last year: Defeating Global Poverty, Master of 500 hats, MicroCapital, Microfinanzas, Silicon Valley Microfinance Network, and Unitus Microcredit Loans. More on the blogroll.

Posted by Pablo Halkyard at 12:06 PM in Access to finance, Creative approaches, Finance | Permalink

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