Microfinance India

Indiamicrofinance.com

brainmaya — Wed, 24 Jun 2009 05:31:31 +0000

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New Website

brainmaya — Fri, 19 Jun 2009 03:42:01 +0000

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Microfinancing and Mentoring via Mobile Phones

brainmaya — Thu, 18 Jun 2009 08:31:00 +0000

We’ve already written about a few microfinancing platforms focused on the developing world, including Kiva and C4-World. Next up is Mobile Movement, a Canadian initiative we just learned about that works via mobile phone.

Few young social entrepreneurs in the developing world have computers, so Mobile Movement provides mobile phones and training to foster both micro-funding and professional advice via SMS, MMS and email. Through a collaboration with UN-HABITAT, Microsoft Research India and the Vancouver-based Environmental Youth Alliance—with funding from the MacArthur Foundation—Mobile Movement’s first prototype project is currently under way in Kenya, where it is working with 15 youth groups from the slums and low-income neighbourhoods of Nairobi that are part of UN-HABITAT’s Urban Entrepreneurship Program.

One such group aims to open a tailoring school for at-risk youth, for example; another hopes to build an urban agriculture project. Last fall the groups were given mobile phones and trained in their use, allowing them to begin taking photos and sending emails and texts soon afterwards. Thanks to Mobile Movement’s storytelling website and videos, several groups began to secure funding for their projects earlier this year, and a creative business partnership was formed between a bone-craft collective in the Kibera slum and a New York City jewelry designer.

Potential donors of funds or advice begin by reviewing the groups’ project descriptions online. When they find one that interests them, they can write a comment on the group’s page, and it will be sent directly to the youth group’s phone. The group will respond via text message or email, and Mobile Movement will notify the donor that the youth group has responded. From there donors can offer creative business ideas or mentoring as well as microfinancing loans and community grants, sent via PayPal or CanadaGives. The Environmental Youth Alliance and UN-HABITAT manage and administer funds raised; 90 percent of proceeds go directly to the youth, while 10 percent is reserved to administer the fund and maintain the website.

Ultimately, Mobile Movement hopes to get companies to use its platform as a way to personalize their employee charitable donations programs. For the next phases of its test project, it seeks technological, management and marketing experts to help improve its current system. Later this year it hopes to expand to additional East African cities, followed by a broad public launch in early 2010. More information can be found on NetSquared; one to join up with, participate in, or be inspired by.

Website: www.mobilemovement.tv
Contact: team@mobilemovement.tv

Via Springwise

Entrepreneurship Lessons | Ten tips on raising funds for the first time

brainmaya — Tue, 16 Jun 2009 17:17:00 +0000

Entrepreneurship Lessons | Ten tips on raising funds for the first time

It’s also very unnerving, besides time-consuming, for the entrepreneur to explain his business to an outsider multiple times, without being sure whether a deal will finally get closed

Most entrepreneurs fly blind in their first fund-raising. They don’t know what it involves. A lot of them don’t have friends on the investor side, and there are a lot of misconceptions about what investors are looking for. It’s also very unnerving, besides time-consuming, for the entrepreneur to explain his business to an outsider multiple times, without being sure whether a deal will finally get closed.

Early action:Helix Investments’ Cyrus Driver says it’s important not to defer raising funds till the firm runs out of money.

Cyrus Driver has experience both as an entrepreneur—he founded Calorie Care, a calorie-counted meal delivery service in Mumbai in mid-2004—and as an investor—he is director of Helix Investments, an India-focused private equity fund sponsored by the Culbro and Bloomingdale families of the US.

Driver offered 10 tips to around 200 entrepreneurs who gathered at a forum organized by Yourstory.in, an online platform committed to providing visibility and networking opportunities to entrepreneurs, start-ups and self-made professionals, on 29 May in Mumbai.

Here are his 10 lessons, shared seriously, yet in a lighter vein.

1. Pitch directly to the person who has the power to say ‘yes’
In a venture capital (VC) or private equity (PE) firm, there are so few people that there’s an element of title inflation. I myself fall in the middle of the hierarchy. My business card will say director, but the reality is that there’s an investment committee in the US that takes the call. It is important for an entrepreneur to know who is the real decision maker.

If he has to wait for a few weeks to pitch to that guy, it’s better, especially if it’s an early-stage idea. If you get the top guy interested, then everything else falls into place. All of us in a PE/VC team have the power to say “no”, but very few have the power to say “yes”. Pitch directly to those that have the power to say “yes”.

2. Don’t listen to your uncle and his grandfather about valuations
Fund-raising takes months in a normal environment. In this particular year, not more than 1% in this room will raise funds. It’s important that you don’t defer fund-raising until the firm is running out of money. Also, when not sure how much to raise, it’s safer to raise more than required. There’ll always be more heartburn (in this) as there’s more dilution.

And finally, you’ll always have some uncle, cousin or friend who claims that valuations are this and that. The reality is that for every business, the value you will get this year will be less than that you were getting last year. Either you get real about that or you’ll just keep negotiating.

3. You need a CFO. Now.
Any company with a turnover of more than Rs4-5 crore will need a good chief financial officer (CFO) or a head of accounts. I’ve yet not met an entrepreneur who does not think his CFO is worth the salary being paid. A good CFO will help you with fund-raising. And more importantly, investors speak the financial language which first-time entrepreneurs rarely speak. Investors don’t want to hear anecdotes about what your customers said. They want to see the business by segments, margins and understand what drives margins. That’s the language the CFO speaks. Also, while interacting with an investor, the CFO takes a lot of pressure off the entrepreneur.

4. Bargain hard for a good price, but don’t believe your own spiel
In most negotiations, the entrepreneur says his company is worth so much even though it has a limited profit margin now because next year this is going to happen, and the year after that is going to happen, and so margins will expand. But the investor says he can pay value only for what the entrepreneur has already achieved. As a compromise, they link the value to the profits one or two years from now. In 99% of the cases, the entrepreneur goes through sleepless nights because he’s missing targets. I would suggest entrepreneurs take fixed valuations. Bargain as hard as you want, but don’t start believing your own spiel if you want to close a deal. Everyone has to market themselves, but you need to know where to draw the line.

5. Don’t fight investors’ exit rights, there’s no escaping them
If an entrepreneur reads through each line of a shareholders’ agreement from the day he starts fund-raising, it’s more likely that he’d stop the process immediately. Because, in theory, you can’t scratch your nose without the investor’s permission, you cannot sell your shares to anyone, sometimes you cannot sell your shares for three years, and in some cases, if you don’t do (an) IPO (initial public offering) in a certain period, the investor has the right to sell the entire company. These clauses are very unnerving. Most of the times, these are not used. The broad rule is if the entrepreneur is honest, these will never be used. If he is cheating, then it’s the stick hidden behind the investor’s back. So don’t fight it, you can’t win.

6. Stick to your business area, investors love more of the same
Focus, core competence, etc., are clichés thrown around, but most private equity investors do not have the confidence in their own ability to spot a winner. And it is a rational decision to back a company that is going to do more of what it has already done. They’ll probably back a company that sells baby powder and shampoo, and now wants to get into soaps.

But investors will not take a risk with a company which sells soaps and powders and now wants to start a film studio. Private equity investors love more of the same. Entrepreneurs, when they approach funds, should not have a fund requirement for some unrelated business. It dramatically reduces their chances of success.

7. Don’t pay more than 3% to your investment banker
Bankers get joked about a lot, but a good investment banker will go a long way. First, he speaks the language of the investor, so he’ll summarize your business into a document that the investor can understand quickly. Most investors, in their first instance, want to understand your business in half an hour to an hour. A good banker will also negotiate on your behalf and get you the best terms, and he’ll give you access to a lot of investors.

But first, you should get a banker who has actually done deals. Second, there’s a lot of opaqueness around the fees. Anything above 3% of the funds raised is too high, no matter what the banker says. The bankers also use the “bait and switch” technique where they’ll start by promising you a very high valuation, but later say, “What can I do, the market is like this.” So don’t get fooled by big talk.

8. Investors always ask the right questions; you look for answers
Investors are typically non-risk-taking, highly informed professionals who can add value in mergers and acquisitions, get information about similar businesses around the world, and help you with future fund-raising. In India, they typically do not have operational experience. So they are not going to be your mentor or guru. Many will claim value-addition, but entrepreneurs need to look deeply whether that value is there or not.

What investors are good at is asking the right questions. Don’t expect them to provide the right answers. If they could, they themselves would be running the business. The entrepreneur himself has to eventually come up with the answers. Investors ask searching questions and they are not afraid to ask them because they are not emotionally involved.

9. Being honest helps; give your investor bad news early
In dealing with the investor, it really helps to be honest, especially after investment. Whoever you’re interacting with—in every investment firm there’s one guy who’s managing one investment—he will very soon become your ambassador. He will look good if your business does well. So, he’s really on your side. And the worst thing you can do is not to give him bad news early enough and make him look stupid. Then you stand the risk of losing your ambassador. There’ll be decisions later on—whether to raise more money or not, whether to enforce these scary rights or not—when you need this liaison person to stand by you. So just be honest with him. People expect that something will go wrong in the business every now and then, but what is unacceptable is giving bad news later than when it should have been shared.

10. Don’t give ‘hockey sticks’ to investors: avoid overused terms
A lot of entrepreneurs and their small bankers always throw in some terms that do not at all convince the investor. In fact, they reduce the credibility of the business plan. “Hockey sticks” is a favourite, which means some metric that has been falling in the past, is suddenly going to turn around and rise very sharply. And then there’s this phrase of “inflexion point”, which means the magical point that every industry is at the cusp of, where suddenly everything will start going right and growth will be fast.

And finally, there is the argument of “low penetration per capita”. Whether you’re selling shoe laces, motorcycles or aircraft, penetration per capita in India will be lower because we’re a Third World country. That alone does not justify the business.

Livemint.com

Pushed from Charminar- Samira’s death symbolises the exploitation by moneylenders

brainmaya — Tue, 16 Jun 2009 17:16:00 +0000

Hyderabad: The heart wrenching story of Sameera Begum, who died after being pushed down from the Hyderabad’s historic monument Charminar by her tormentor Arshad Ahmad, has brought the cruel exploitation of the poor families by the money lender in to sharp focus.

In a scene out of the Shahrukh Khan’s blockbuster “Baazigar”, a money lender Arshad Ahmad threw Sameera off Charminar after making her sit on the balcony on the first floor of Charminar on Thursday last. The killer, who after his arrest told the police that the motive of the crime was to prevent the girl from revealing her sexual exploitation, had loaned an amount of Rs 14000 to Sameera Begum’s mother two months ago at an exorbitant interest rate of 40% and was recovering the money at the rate of Rs 200 per day.

The trouble started between the family and Arshad ten days ago when the family stopped repayment as their petty business was not doing well. Angered over this the money lender started threatening the family, specially Sameera and her two younger sisters.

Exasperated over this Sameera left home on June 9 promising to arrange the money and repay the amount to Arshad but never returned. The police was now looking in to the possibility that Arshad had confined Sameera to his home and subjected her to sexual exploitation.

After his ghastly act of pushing Sameera to ground, Arshad went to girl’s home in nearby Talabkutta area and told her family to check whether the girl who committed suicide at Charminar was their daughter.

Sameera Begum who was rushed to the Osmania Hospital with serious head injury and multiple fractures, revealed the name of Arshad in her dying declaration.

“I thought after the fall she will die on the spot and the police will treat as a case of suicide”, Arshad told the police.

Arshad said that he decided to do Sameera away because she was pressurizing him to marry after he had physical relationship with her. “Promising to fulfill her wish, I took her to Charminar and pushed her down”, he confessed.

Sameera’s family, headed by a petty trader Mohammed Ysufu is demanding death punishment to the killer of the girl. “We will not rest till he meets the same fate”, said a wailing Khursheed Begum. While the well planned murder of the girl has sent the waves of shock across the city, the factors leading to the crime have also left the people perturbed.

“This highlights the way the poor families of old city are being subjected to financial and sexual exploitation by the money lenders”, said Prof. Rehana Sultana, a social activists who work in the old city.

The Muslim dominated old city, where majority of the people are poor petty traders, has turned in to an open field for the money lenders who lend loans on the daily basis at exorbitant rate of interest ranging from 30 to 50 per cent to the people who don’t have access to the banks.

“It is not very uncommon that the families unable to repay the loan are subjected to violence and exploitation by the organized gangs run by the money lenders. The old city is ruled by such Pehlwans and Bhais who are in nexus with the police”, said another social activist.

Meanwhile the Congress legislator and film star Jayasudha expressing shock over the incident said that the government will do every thing possible to help Sameera’s famiy. “I will try to get some compensation to the family”, she said.

She rued that the film and media were showing the youth a wrong path leading to such ghastly crimes against women. “Don’t show such rogue elements as hero and lovers”, she told the media and film industry.

Two-circles

Dignity In the Cities – Tackling Urban Poverty

brainmaya — Tue, 16 Jun 2009 17:15:00 +0000

Blues In The Big City -
The Planning Commission estimates the urban poor at some 80 million -Figure for the rural poor is 120 million -Over 98 million people migrate from rural to urban centres -The 42nd Indian Labour Conference recommended a scheme for tackling urban unemployment It is early days yet for the new UPA government to make any path-breaking policy announcements. But it is reliably learnt that work is on to give shape to an urban poverty alleviation scheme. The new thinking is it is better to provide the urban poor skills rather than offer them guaranteed work.

A slum in India

Sources said officials in the ministry of urban development and poverty alleviation are waiting for President Pratibha Patil to make the formal announcement in her address to Parliament before they draw up a road map for the new scheme. Unlike NREGS, the scheme for the urban poor will not address the problem by offering an employment guarantee. Instead, it will focus on developing skills through self-help groups and communities, an official said. Sources in the ministry also say that, as the majority of the poor are employed in the informal sector, special schemes are being planned for them. These include health insurance, education subsidy, and imparting specific skills, such as in the use of computers and in the marketing of traditional craft products, skills surrounding which floating populations often bring when they migrate to cities.

The thrust will be to increase the accessibility to services offered by the government, sources said. The setting up of self-help groups will also be in focus. This will help groups of people better themselves through enterprise and the acquisition of skills, and with several individuals pitching in, new small-scale enterprises, trading platforms or services can be created. The government plans to help set up such groups.

So it will be a we will help you help yourself kind of package. Theres nothing new about plans to alleviate urban poverty. In its previous term, the UPA government had thought of a Rs 10,000-crore urban employment scheme covering 10 million families below the poverty line. A plan was also worked out by the National Commission for the Unorganised Sector. About Rs 6,000 crore was earmarked for wages and Rs 4,000 crore for skill development. Broadly, the government had aimed at making a one-time expenditure of Rs 10,000 per person.

But the current thinking is that merely providing employment guarantees will not do. Says a ministry official. We dont think providing employment alone will work, for poverty in urban areas has more to do with having access to services like housing, water supply, medical care, education and so forth. It is with this in mind that the government is proposing to launch a slew of schemes addressing these issues. But who are the urban poor and what are their numbers. The Planning Commission estimates the urban poor at 80 million, in comparison to the rural poor, who are some 120 million. Two studies—by the World Bank and the Asian Development Bank—had fixed the required minimum daily earning at 1.25 and 1.35 dollars respectively per person.

A new framework to assess urban poverty was arrived at by the Office of the Commissioners to the Supreme Court, the Planning Commission, the National Commission for Enterprises in the Unorganised Sector (NCEUS) and NGOs last year. The consensus was that income alone cannot serve as a yardstick of poverty. For, by that token, Delhi has one of Indias highest per capita incomes (Rs 66,728 per annum, against the national average of Rs 29,642), but it also has 15 lakh poor. It was also noted that place of residence alone does not automatically qualify someone as poor. Occupation, nature of employment, whether casual or self-employed, wages, health—all had to be factored in. So when will Manmohan Singh play his urban trumpcard. It may not happen immediately, given the huge fiscal deficit. But the programme will certainly take off, say officials in the urban development ministry.

SHG Gateway

Special Microfinance Scheme from Zoroastrian Bank

brainmaya — Tue, 16 Jun 2009 17:00:00 +0000

The Zoroastrian Co-op. Bank Ltd. (ZCBL) has announced a Special MicroFinance Scheme for Entrepreneurs in India. Under this scheme, a special MicroFinance Fund of Rs.5 crores has been set up, out of which they will be financing Entrepreneurs, to help them set up a new business / service / profession or enhance their existing ventures.

The lending will be in the form of a Term Loan upto a maximum amount of Rs.10 lakhs per borrower, for setting up business/for equipments, machinery, furniture etc. Margin will be fixed on case to case basis depending on the financial status of the applicant.

Repayments will be spread over a maximum period of 60 months by way of fixed EMI’s. The rate of interest will vary on a case to case basis. The principal assets financed by the bank will be taken as prime security. Collateral security / guarantor may be waived in special cases. The proposals under this Scheme may be directly sent to Mr. Tehmasp K Bharucha, Senior Vice President, ZCBL, Email : tbharucha@zcbl.in Tel. Nos. 09422004707 / 66661010.

Young Zoroastrians are requested to avail of this generous and unique scheme themselves, and also pass it on to their Zoroastrian friends / relatives, who are desirous of starting / growing their businesses.

Via Enterprisers

Sun Startup Essentials – Free Software, Technical Consulting and Discounted Hardware for Startups

brainmaya — Mon, 15 Jun 2009 08:37:00 +0000

The Sun Startup essentials program consists of:
Discounted servers
Discounts on storage
Open source software
Discounted partner hosting
Free technical advice and training
Co-marketing opportunities

Eligibility Requirements

In order to qualify for the Sun Startup Essentials program, your company must meet the following criteria.

1.Been in business for 6 years or less
2.A maximum of 150 employees, including any affiliates
3.Be based in India (Averifiable company presence (company name, street address [no post office boxes allowed], etc.)

How it works

Join online.Membership is free. If you qualify, you’ll hear back in less than 5 business days.
Once approved you’ll have access to all program benefits.

Note : This offer is available only for Startups in India

Belgian firm Incofin acquires stake in Asomi Microfinance

brainmaya — Mon, 15 Jun 2009 08:26:00 +0000

Guwahati, June 14: Assam’s fledgling microfinance sector has receive a boost, with a foreign company picking up a stake in Asomi Finance Private Ltd — an institution which undertakes microfinance, income generation and development activities in the state.

Incofin, a Belgium microfinance company, which operates in 23 countries across the globe, has picked up a 34 per cent stake (Rs 8 crore) recently in Asomi Finance Private Ltd.The Assam company got its non-banking financial company (NBFC) licence from the Reserve Bank of India on October 30 last year.

This is the first time that the Belgium-based company has invested in the country.

Microfinance is required, as many small entrepreneurs, farmers or artisans in Assam often do not have sufficient collateral or a regular income to qualify for conventional bank loans.

With a small loan, these individuals can start or develop their own business and secure their livelihood.

They thus become more independent and contribute to building a local economy, which, in turn, creates jobs and brings stability.

“The non-banking financial company was formed to raise capital to lend to the rural poor in Assam. We have been operating through ASOMI, a non-governmental organisation, since 2002. But it was very difficult to raise capital to canalise to the rural mass through a non-governmental organisation. Hence, the company was formed to raise capital from the market and provide it to the people who want to engage in income-generating activities to enhance their living standards,” Subhra Jyoti Bharali, the chairman-cum-managing director of the AFPL, told The Telegraph today.

He said the money was required to reach two lakh families in the state.

The company has been able to help 33,000 families through finance, skill upgrades and capacity development and is working in 16 districts at present.

Bharali said the team members of the Belgium company had understood the specific characteristics of their company.

“They were very responsive in providing solutions and distance and cultural differences never seemed to matter. On the contrary, through its international network and outstanding reputation in the field of microfinance, I feel Incofin will bring a big added value.

“The capital injection by the Rural Impulse Fund of Incofin is a first step in the growth strategy of AFPL. In the coming years, further capital will be attracted, both from the existing local partner and from new partners. For Incofin, acting as sole and lead investor, this investment is an important first entry into India. This shows we have an excellent name in the world of microfinance and that we can be very responsive, even in the face of strong competition,” said Loïc De Cannière, the CEO of Incofin, in a statement.

The Belgium company has a capital base of 150 million Euros and is operating in 23 countries over the globe.

Various European banks like Fortis Bank and international fund providers like the International Finance Corporation and World Bank, are the shareholders of the company.

The company has also requested the IFC to take up equity in the company as this will have a significant demonstration effect and may help in attracting private capital to the region.

The idea is to expand to nearly four lakh people over the next five years and provide livelihood generation opportunities in the region.

Bharali said the investment was a big boost to the microfinance sector in Assam. Other institutions like IFC and Blue Orchards (Switzerland), are showing a keen interest to invest in Asomi Finance Pvt Ltd.

telegraphindia.com

Agile FT inks deal to acquire Theme Tech’s micro finance products

brainmaya — Mon, 15 Jun 2009 08:21:00 +0000

Agile Financial Technologies (Agile FT), has signed an agreement with India based Theme Technologies. This will enable Agile FT to acquire Theme’s Micro-Finance, Micro-Credit and Credit Management product stack, in an earn-out mechanism over three years. The products are compliant with CGAP standards.

The products will be rebranded and launched as Agilis Universal Microfinance(UMF). And this will enable Agile FT to offer Agilis UMF as a software platform as well as an outsourced service to Micro Finance Institutions in emerging markets.

Speaking on announcement, Kalpesh Desai, CEO, Agile FT, said: “From a modest beginning on a pilot basis in 1992, the microfinance industry in India has now touched the lives of more than 50 million people. The need of the hour is to enable delivery of services such as credit, pensions and insurance to this community quickly and efficiently, which is possible only through cost effective yet scalable technology. “

Agile Financial Technologies (Agile FT) is a global technology provider to key players in the Banking, Financial Services and Insurance sector in emerging markets.

Theme Technologies is a Global Information Technology company providing IT solutions for the Banking and Financial Services.

BS