InVenture

 

 

InVenture is a social enterprise with a mission to provide the capital, guidance and support needed to empower business owners to lift themselves and their communities out of poverty.  While micro-credit has helped alleviate the struggle of subsistence living for many budding entrepreneurs in developing countries, it does little to expand these businesses beyond sole proprietorships and create jobs within the community.  While often the means by which the entrepreneur launched their venture, micro-lending’s high interest rates, rigid payback structure and lack of guidance prevents micro-businesses from growing.  They find themselves suddenly trapped in the “missing middle”: the gap in financial services between micro-loans and the traditional banking sector.

 

SOLUTION
InVenture addresses the barriers to self-sufficiency and growth through its unique model by connecting emerging micro-entrepreneurs with financing through unsecured equity-like instruments, or “quasi-equity.”  Through this model, InVenture bridges the gap between debt and venture capital by allowing online supporters (also known as “InVestors”) to achieve social and financial gains through profit sharing and principal repayment.  This flexible financing allows micro-businesses to pay back funds as they grow, and affords micro-entrepreneurs the opportunity to break the micro-loan cycle.

InVenture also provides mentoring and hands on strategic guidance to help businesses grow holistically.  Through a fellowship program managed in partnership with the InVenture Foundation, entrepreneurs receive business development assistance to help formulate strategy and set viable targets for financial growth. Fellows work to create market linkages, provide access to information, and educate entrepreneurs on business and financial management. Entrepreneurs are also trained on how to track social performance metrics and make operational course corrections based on the findings to ensure that the business is meeting its established social goals.

Lastly, InVenture requires all micro-entrepreneurs to re-invest a portion of their profit back into reproductive health, girls’ education and women’s vocational training initiatives in their communities.  This re-investment is the catalyst for a positive feedback loop – growing a community through a business, while growing a business through a community.

 

ACTIVITIES
InVenture is comprised of four main activities carried out across a pair of collaborating organizations: an online micro-investment platform (www.inventure.org), a quasi-equity investment tool, SMS reporting/tracking platform and guidance to entrepreneurs the field.

Online Micro-InVestment Platform: InVenture provides a simple mechanism for socially conscious individuals to fund expansion of micro-businesses in developing communities. InVenture connects micro-entrepreneurs with flexible quasi-equity through our online micro-investment platform. This peer-to-peer platform provides a direct and transparent variation of traditional philanthropy, connecting InVestors to individual micro-entrepreneurs and their communities. 

 Quasi-Equity tool:  InVenture’s quasi-equity tool combines the flexibility of traditional equity with a structured repayment schedule that fits the needs of micro-businesses and supporters alike. InVestments are typically between $1,000 and $10,000 – the next step in financing upon graduation from micro-loans reaching their lending ceilings (typically between $1,000 to $2,500).  InVestment sizes are based on businesses’ needs, on pricing power of the business, and on the entrepreneur’s ability to scale their business. 

InVestments by individual InVestors are not binding security contracts.  InVestors pledge financing as an unsecured, interest-free loan to the micro-entrepreneur.  Principal can be returned at the end of the InVestment term, however, InVestors cannot receive financial returns generated by their InVestment.  InVestment returns are restricted as “Social Enterprise Expansion Dollars,” (SEEDs) held by InVenture. SEEDs can be directed by InVestors towards new entrepreneurs, thereby growing their future impact.

SMS Reporting/Tracking Platform:  Using SMS mobile technology, InVenture receives basic financial indicators from each micro-entrepreneur in order to better track, forecast and gain insight into our entrepreneurs’ cash flow management. InVenture also uses the SMS platform to track social performance metrics in order to gauge the outcomes of the overall InVenture program. 

Entrepreneurial Guidance in the Field:  Through a fellowship program run in partnership with local microfinance institutions (MFIs) and Non-Governmental Organizations (NGOs), on the ground business development advisors provide consistent support and guidance to InVenture-supported micro-entrepreneurs. 

 

PROCESS / HOW WE WORK
InVenture’s success relies on its ability to scale its due diligence model quickly and across diverse geographies. Our investment process is as follows:

 1.     Region & Field Partner Selection:  We focus on low-income countries with stable governments, large urban centers, and a developed microfinance industry. InVenture evaluates prospective partner MFIs and NGOs by looking at past history, number of clients, and alignment with InVenture’s commitment to training of livelihoods and financial literacy.  

2.     Entrepreneur Selection: With the help of local MFIs or NGOs we look at a variety of factors such as: loan history, type of business, scalability, profitability of each business, and commitment to community reinvestment before deeming the entrepreneur as investment ready. After revenue projections and a detailed profile have been created, InVenture customizes an investment structure that meets the needs of the specific region, culture, and/or business type.

3.     InVestors make InVestments: Once agreement is reached, the entrepreneur’s profile is posted onto the InVenture website, where users (“InVestors”) can pledge funding (“InVestments”) to these businesses.   

4.     InVestments Disbursed: Each investment has a set disbursal date. At that time, 100 percent of the funds which have been raised through the website are disbursed directly to the entrepreneur. 

5.     Mandatory Record Keeping: During the InVestment term, entrepreneurs are required to report daily financial and social data via SMS messaging (if an entrepreneur does not own a phone, one would be provided for them).  

6.     Entrepreneurs Repay: InVestors receive their principal and SEED’s in their portfolio accounts. 

7.     Community Reinvestment: We work with local and international NGOs, and entrepreneurs themselves to find reproductive health, girls education and women’s vocational training initiatives in their communities.

 

STRUCTURE
We have created InVenture’s own business model to also be part of the solution – accessible, sustainable, transparent and responsive to all our varied stakeholders. To achieve its goals, InVenture has adopted a hybrid approach in which portions of operational processes have been privatized as the InVenture Capital Corporation (ICC), with remaining activities housed in the InVenture Foundation. This division cuts down on administrative overhead and increases InVenture’s overall efficiency, with 100% InVestments from online users going directly to micro-entrepreneurs. Furthermore, this structure also puts InVenture in the ideal position to scale both entities rapidly, reaching exponentially more communities than it could have as a single organization.

The ICC is a Certified B Corporation (pending) that provides expansion capital to rapidly growing enterprises in developing communities. ICC conducts due diligence on potential entrepreneurs, tracks the progress of the businesses through their expansion, and relays financial and social metrics to online InVestors.  Furthermore, ICC houses the online platform through which all financial transactions are administered and manages the global portfolio of InVestments. For the online InVestor, ICC’s platform and the entrepreneurs featured on it are the foundation of the user experience.

The InVenture Foundation provides educational training and on-the-ground advisory support to InVenture entrepreneurs and their communities through its fellowship program, working in an InVenture community with partner MFIs and NGOs to provide the necessary business guidance and training to entrepreneurs in the field. In addition, the InVenture Foundation partners with universities and grant-making foundations to provide access to the latest research, technology and human resources for the benefit of InVenture Foundation’s entrepreneurs and fellows.

InVenture Foundation is responsible for and uses a transparent process for scouting, evaluating, approving and developing relationships with local and international NGOs as potential recipients of entrepreneurs’ re-investment funds.

 

KEY FACTS & ACCOMPLISHMENTS

  • 2011 Echoing Green Fellow
  • 2011 Unreasonable Institute Fellow
  • 2011 William James Finalist
  • 2011 Skoll World Forum – Delegate
  • Raised $300,000 in Seed Capital
  • Awarded Start-Up Chile grant – $40,000
  • Winner of TechCrunch LA 2010
  • GEW 50 – Finalist in Top 50 most promising startups of 2010
  • 2010 Pop Tech Semifinalist
  • 2010 CFED Semifinalist

 

ADVISORY BOARD

  • Arshad Chowdury, CEO at Clear Gears Elizabeth Clarkson, Director at Draper Fisher Jurveston
  • John Coonrod, Executive Vice President at The Hunger Project
  • Howard Friedman, Statistician and Economist at UNFPA
  • Jessica Jackley, Co-founder Kiva.org, CEO & Co-Founder of Profounder
  • Sachita Shenoy, Co-Founder Upaya SV
PhilanthroConnect2011 is an official project of Philanthro Productions, Inc. ("Philanthro"), a 501(c)(3) non-profit public benefit corporation. Copyright Philanthro Productions, Inc, 2011. All Rights Reserved.