Defeating Global Poverty

Unitus has provided a great way to honor women who have empowered those around them. You can create a tribute to an empowering woman you know ... upload a photo, write a small tribute and then donate to empower more women with opportunity through a microcredit loan in a developing country. Every $5 you donate empowers a woman ... and her family ... and much more! You can empower 10 women for $50.

What a great mother's day gift!

View more tributes...

Labels: empowerment, poverty, unitus

Unitus announced last week that they’ve raised a US$23 million private equity fund to invest in microfinance. I was able to catch up with Chris Brookfield, Director of Unitus Equity Fund, last week to find out more about this announcement.

Dave: What is Unitus announcing today?
Chris: Unitus is announcing the closing the Unitus Equity Fund (UEF). UEF is formed just like the other venture funds I have been a part of. The difference is that UEF is committed to investing into sustainable microfinance enterprises. It is our hope that by demonstrating that microfinance can scale rapidly and produce returns for investors that much greater amount of investment capital will follow. By increasing the capital available to microfinance companies, we increase the number of borrowers that can be served. So each new investment dollar in will translate to a new opportunity for a poor person to become an entrepreneur.

The 'close' means that we have exceeded our goal and will now be focused 100% on finding new MFI's to invest into. We closed on $23 million.

Dave: What are Unitus' key objectives for UEF?
Chris: We have 5 key objectives:

1. Demonstrate that non-profit microfinance banks can transform into sustainable commercial companies.
2. Show that 'professional' investors are willing to invest in microfinance.
3. Begin the formation of microfinance as an investable asset class.
4. Attract larger, upstream investors to the space, and
5. In the end, show the microfinance is a dynamic, high growth business and that the poor are an attractive market for future investment.

Dave: What is unique and ground-breaking about this announcement?
Chris: There a couple of firsts (as far as we know):

• UEF is the first equity fund in microfinance to be financed 100% in the private market. Most others have capital provided by development agencies and the like. This distinction is important because of the UEF's more 'professional' the investors, our results will have better demonstration effect and be more relevant to other professional investors.
• We are taking a unique venture capital portfolio approach. Our intention is to partner with the best managers in microfinance and encourage them to innovate and grow rapidly.
• The UEF is global in scope, but focused on India, Mexico, Brazil, Indonesia and Pakistan.
• The UEF is a pioneer in creating a hybrid socially responsible investment vehicle that is also managed for risk appropriate returns.

Dave: How are the UEF monies going to be invested?
Chris: The UEF will invest in 8-10 microfinance companies and allocate $2-3 million per company. More than 50% of the companies will be in India, with the rest spread amongst other countries.

Dave: UEF has already made some investments. Can you please describe a couple of those and what impact you are expecting?
Chris: Our investees are SKS (India), Ujjivan (India) and Credex (Mexico). Overall, Unitus has chosen to partner with these MFIs because of the potential for very high growth. You can see some of the detailed goals on Unitus’ web site.

Dave: Who are the investors in UEF and why they have invested?
Chris: The UEF investors break out into roughly 4 groups each contributing about 25% of the capital:

• Unitus board members and friends.
• Omidyar Networks, the investment vehicle of Pierre Omidyar.
• Professional investors who are leaders in technology VC, private equity and health care.
• A group of socially responsible investors managed by Abacus Wealth Management.

Dave: Some people think that for-profit microfinance is (or can be) predatory or immoral ... that is, earning returns for wealthy investors from the financial services provided to the working poor? How do you respond to this?
Chris: I believe that investors of all types need to practice the highest ethical standards in all that they do. The investors in UEF, its management and our Investment Committee are deeply committed to sustainable investing that will create ongoing opportunities for people in all of the markets we invest.

To this end, UEF places a strong emphasis on valuing its investment on a basis of the long term health of the underlying customer bases. Our banks can only do well they customers and communities do well. That's really our bottom line.

Profits means that microfinance is sustainable in the long term. Not hostage to the whims of political agenda or the grace of donors. If microfinance can continue to grow sustainably, then it will be able to attract investment from the global capital sources. This is the only way microfinance will be able to serve the 2 billion people who need it.

Dave: Why do you like working with Unitus and the UEF?
Chris: This has been one of the most rewarding challenges of my life. It is not easy to raise money for an industry most people have never even thought exists or to make investments in multiple countries. While my international travel regimen is quite grueling, I am very energized. I can't wait to see how the story of microfinance develops and what role our investments will play.

Labels: brookfield, equity, interview, microfinance, poverty, social investing, uef, unitus, venture capital

Dave McClure writes an articulate article (and appeal) for us to invest in microentrepreneurs just like we invest in entrepreneurs in the developed world today.

The working poor all over the world who live on $1-2 a day. Pound for pound, rupee for rupee, they're the world's tiniest yet most powerful entrepreneurs. But they're not in Silicon Valley; the hotbeds of microfinance are in India, Latin and South America, and Africa.

Dave recommends Unitus as one of the most leveraged ways which you can invest in these microentrepreneurs. As of December 2005, Unitus works with 7 microfinance bank partners to serve over 500,000 microentrepreneurs and their families in 3 countries around the world. By the end of 2009, Unitus intends to grow their reach to over 3 million working poor. Read full article.

More details on how to support Unitus

[My family also actively supports Unitus with time and money.]

PHOTO INFO: Photo above is of a microentrepreneur running a tea stand business in a village outside of Hyderabad in India. She used her microcredit loan from SKS (microfinance partner of Unitus) of ~$100 to purchase her tea stand equipment. She paid a bit more for the stand to be mobile (it has wheels) so that she could re-locate as needed to busier areas of her village. Earnings from her tea stand business now now funds her children going full-time to school amongst other things.

Labels: microfinance, poverty, unitus

Unitus, the global microfinance accelerator, is hosting the Unitus Leadership Summit in Malaysia. This 3-day event brings together CEOs and senior management from 11 high-growth microfinance (MFI) banks based in developing countries including India, Mexico, Kenya & Philippines were participating. I am onsite for this event. I am blogging more details on the Unitus blog.

The focus of this summit is peer learning. On average, these organizations are growing at 70-80% per year. With this kind of growth comes major challenges in outgrowing systems, people and capital.

Mixed in with these entrepreneurial leaders are a group of talented business leaders from other industries who are presenting lessons learned from high growth and how to think about creating a high performance organization. Executive have experience from high-tech, consumer products, organization development and venture capital. This process of having an intimate environment of multi-industry executive interaction and learning is very unique as most microfinance conferences generally involve only MFI-insiders. This is another example of the innovative approach that Unitus is taking to helping the microfinance industry break-out of its overall less-the-stellar growth (based on the market demand.)

Full disclosure: I recently joined the board of Unitus because of how impressed I am of their innovative approach to accelerating microfinance.

Labels: poverty, social entrepreneurs, unitus

I attended the official launch event of the new partnership alliance between microfinance leaders Unitus and Accion in Bangalore this past Friday. This is a unique partnership of two experienced and innovative organizations who are turning their expertise and resources to bring massive acceleration of access to microfinance to India, a country with 1/3 of world's poorest and to date significantly underserved with the empowering help of microfinance services.

The alliance has set an extremely ambitious goal of serving 15 million poor households in India by 2015 estimating to touch conservatively 75 million people (assuming 5 people per household.) This would represent a massive impact on global poverty in addition to being a transforming process for India.

Unitus will be focusing on "scaling up" innovative, early-stage/start-up Microfinance Institutions (MFIs) and Accion will be focusing on helping large, traditional banks in India "down-scale" to start providing relevant financial services to the poorest. Unitus has a good start with current partnerships with 5 very promising MFIs who are demonstrating significant progress already.

An overview of Microfinance

Labels: accion, india, poverty, unitus

I recently met with the CEO of a non-profit called Unitus which is focused on being a micro-finance accelerator ... essentially a venture capitalist for high-quality, under-capitalized micro-finance institution (MFIs). Here is a summary of their approach which is very interesting and somewhat controversial. They are very much focused on how to significantly scale micro-finance services in developing countries in order to bring these kind of services to the mainstream.

I resonate with their vision that the poor deserve access to financial services which today are reserved for the non-poor. I think that an approach which mainstreams financial services to the poor within the next 10 years is an amazing mission which will dramatically impact making poverty history.

Watch a video overview of microfinance ... what it is and how it works.

Labels: microfinance, poverty, unitus