Jessica Jackley co-founded Kiva.org back in 2005. Since then, nearly half a million people have used the micro-lending platform to offer money to fellow citizens, almost none of whom will ever meet offline. Jackley's passion is in empowering entrepreneurs to improve their communities and the world, a charge she's carried forward into a new venture, Profounder, aimed at helping feisty US-based entrepreneurs with good ideas and a dearth of capital. She talks to TreeHugger about the rising tide of crowdfunding, recent accusations in the micro-lending world, and offers tips on using social media to move ideas forward.
Full text after the jump.TreeHugger: For anybody who doesn't know what Kiva is, can you give us a snapshot of how it works?
Jessica Jackley: Kiva is the first peer to peer micro-lending website. You can go onto the website, browse profiles of entrepreneurs who need a small loan. Usually it's to start or grow their business, but Kiva has just started to have loans for education and other things as well. But, basically, you find somebody who resonates with you. You can lend $25 or more toward their loan need, and then, over the course of the loan you get paid back, and you get updates on how they're doing. Then you can lend again.
TH: What was the initial spark that gave birth to the idea for Kiva?
Jackley: I learned about micro-finance in a classroom setting, actually, for the first time from Dr. Muhammad Yunus. He was giving a lecture at the Stanford Business School, where I was working at the time, not yet a student. When I heard him describe his work with the Grameen Bank, pioneering modern microfinance, I was blown away for several reasons. Micro-finance sounded amazing and fascinating, and yes, his story was very accessible.
The beginnings of the Grameen Bank included him reaching into his pocket and lending a small village of women just a little over $20.00. The rest was microfinance history. But, more than anything, he told a story of poverty and the poor that changed the way I saw potential and possibility in that community.
I'd always responded to pleas from non-profits and other organizations to help the poor through donations and methods that didn't necessarily connote that I believed in their potential to make their own life better, to create change for themselves and their families.
So, hearing about the poor entrepreneurs was huge for me. And I was so intoxicated by this idea and so intrigued that I quit that job at Stanford and moved to East Africa. There I spent about three and a half months interviewing about 150 entrepreneurs who had received $100 to start or grow their businesses.
And, indeed, I found stories much like what Dr. Yunus had described, of these amazing people getting up every day, working harder than anyone to change their own lives and lift themselves and their families out of poverty.
And they were entrepreneurs. They weren't the charity cases that I had always heard about. I then had the privilege of responding to them more as a partner, more as an equal, somebody who could participate in what they were doing, at least, in a small way. And I could respond to them with dignity and respect.
Instead of giving a donation (which no one asked for) myself and my cofounder of Kiva, Matthew, we really wanted to provide loans to them, not donations. So I worked on the ground there and found the entrepreneurs. Then Matt went back to Silicon Valley and was building the basic first version of the Kiva website.
The initial idea in the Spring of '05 was, "Hey let's stay in touch with our new friends in Uganda, and Kenya, and Tanzania. Let's lend them the little money that they need to keep going with their businesses and let's see what happens."
So, it was a very simple concept, a very simple idea that just ended up growing very rapidly over the following years.
TH: Since you guys got going, how many people have gotten loans through Kiva?
Jackley: Well, the first little round was about $3000, and just seven entrepreneurs that needed a small loan-all in Uganda. Then when that worked we launched officially in October of 2005. That first year we did $500,000 in loans. The second year was a total of $15 million in loans. The third year was of up to $40 million. The fourth year was just shy of $100 million. And today we're five and a half years in and we just crossed the $200 million mark, which is really exciting.
In terms of numbers of people, there are over half a million lenders and over half a million entrepreneurs that have participated in either lending or receiving a loan through the site.
In terms of number of countries represented by Kiva lenders, it's up to 209. It's wonderful to think of people, almost everywhere on the planet, lending.
TH: If somebody wanted to go on to Kiva and pinpoint entrepreneurs who are doing things that are particularly green, is that something they can search for?
Jackley: It absolutely is. If you go to the site, Kiva.org, and click on lend, you can sort by a number of different things. On the left there's actually a checklist. It's under sector, but if you check the box that says green, you've got it. There's also agriculture, art, clothing, education, manufacturing, whatever.
TH: Most of your time and energy these days is going into Profounder, which is relatively new. Explain how ProFounder works.
Jackley: ProFounder is a platform for US entrepreneurs (we're just in the US right now). Entrepreneurs can come to the platform, create a profile for themselves, and then, actually solicit from there own friends, family, and community members, investments for their small business or their startup.
They create their pitch. They set their own terms. And, we walk through that, so we make something that can be very complicated for people very simple and straightforward. You can set terms around revenue shares. In the next few weeks you'll be able to set them around equity. And we have other plans for other structures in the future.
And then, you can publish this fundraising page with all of that information about your business, like how much money you're raising and the term available. Then you invite investors in.
You can do this in a really controlled manner, like just one at a time, invite-only, friends, family, anyone who's close to you. Maybe these are people that you've had as customers in your small business, maybe it's somebody that is another professional contact that also works with you and has a similar business.
Whoever it is, you can invite them in. They can view your raise page and then they can invest online. And when you get the money that you're trying to raise, you collect it all.
Then, over the course of your contract, you can also use ProFounder for all the back office stuff. Not just to keep in touch with your investors, but to actually do the payouts as well; whether it's dividends from an equity-based term sheet, or the percentage that you've promised for revenue share over whatever period of time you decided works for you.
A big part of what we provide that's valuable to people is helping to provide information, and not official legal guidance, but a bit of navigation through the web of compliance issues that can come up if you are including actual investors in many different states. Donations that's one thing. Loans, that's another thing.
To actually, invest in you business, it can get very complicated very quickly, especially for what the government would classify as an "unaccredited, unsophisticated investor." There are very different restrictions there than for an institutional investor, a professional investor. Somebody who just has millions and millions of dollars would be seen as an accredited investor.
We help you navigate and optimize for including the maximum number of everyday people: unaccredited, unsophisticated (those are both legal terms) investors.
So that's what ProFounder does: anybody that you invite can invest in your business, you can set whatever terms you want, you can raise $10,000, you can raise a million. And we help you facilitate all of it legally and officially.