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Protocol | Fintech

The pandemic ravaged small businesses around the world. Now Kiva wants to help them rebuild.

The crowdfunding nonprofit's projects aren't sexy — think water filters or a herd of sheep — but they don't have to be.

The pandemic ravaged small businesses around the world. Now Kiva wants to help them rebuild.

Morn, a rice farmer in Cambodia, got a $125 Kiva loan to buy a water filter for her family.

Photo: Kiva

In the realm of crowdfunding, Kiva is a trailblazer. It's not as well known as sites like GoFundMe or Kickstarter. That comes with the territory: Instead of a cool new tech gadget or a theater production, Kiva raises funds for more basic, unsexy projects — a cow for a farm in Uganda or cooking oil for a small business in El Salvador.

Neville Crawley has been Kiva's CEO since 2017, leading the 15-year-old San Francisco nonprofit which aids small enterprises throughout the world, including impoverished communities and those reeling from war or the pandemic.

Kiva invites individuals to lend as little as $25 to entrepreneurs, typically people with little or no access to banks. The borrower can be a woman in Jordan who needs $575 for her housewares business or a family in Congo looking to raise $700 to buy bags of charcoal for resale. (Borrowers pay interest only on loans provided through funding partners, such as other nonprofits, microfinance institutions and schools. Kiva covers the administrative costs of individual-funded loans.)

Kiva has provided $1.5 billion in loans to nearly 4 million entrepreneurs in 77 countries. Some loans have been controversial, including two instances from before Crawley joined. In 2013, Kiva was criticized for providing loans to a Kenyan university with ties to a conservative Catholic organization known for its opposition to LGBTQ rights. In 2008, funding for a cockfighting ring in Peru also sparked controversy.

Kiva has taken on new and bigger challenges under Crawley. Recently, it has focused on communities affected by COVID-19, a campaign it launched with actress Sofia Vergara. This month, it helped set up a $32.5 million fund geared toward refugee communities. Kiva also launched a new program that uses blockchain to help borrowers build a credit history.

Crawley, who was CEO of the data analysis company Quid before he joined Kiva, explained that initiative in an interview with Protocol. He also discussed what the nonprofit has learned in its nearly 16-year history and how it has adapted to changes in finance and technology.

This interview has been edited for clarity and brevity.


Kiva CEO Neville Crawley took on his role in 2017.Photo: Kiva

What are the big changes Kiva is pursuing?

We really do three things. We do the crowdfunding platform, which is probably what we're best known for. Second thing is Kiva Capital, which is an asset management business which we run alongside the crowdfunding platform. The third thing we do is called Kiva Protocol, which is an identity system. With a lot of the people we're lending to, the Kiva loan they got doesn't necessarily contribute to their credit history because they're not tying it to an identity. So we built this digital identity platform. We've created three-and-a-half million identities in Sierra Leone in partnership with the government there, and connected them up to financial institutions.

You were founded shortly before the 2008-2009 financial crash, which was followed by the big wave of fintechs. How would you describe the way Kiva has navigated both the crises and the rise of new players in small business lending?

Since Kiva started, there's been a couple of big global crises. In the places that we operate, we see regularly more and more localized and quite intense crises. It can be war. [But] we have a 96% repayment rate across our portfolio. Even when we see extraordinary conditions, we continue to see the entrepreneurs make repayments. Back in the days when we could travel, and I would actually meet with borrowers, it's extraordinary. The loan can be to buy a cow. And no matter what's happening, the person who has the cow is making it work and making their repayments. The resilience is extraordinary.

How do you view your role in small business lending?

We are typically the first rung of the capital ladder. In the U.S., we're lending to people who often have no credit history. We might make a $20,000 loan or $50,000 loan, something like that. But it really is the first step.

Yours is the startup fund for, say, a business owner who wants to start a food truck.

A food cart. A one- or two-person barber shop, or a very small local community business.

The banks don't finance those, and even new fintech lenders typically are not going to finance those, right?

No, they don't, and certainly not in a way where we're offering multiyear payback and some flexibility in the payback schedule.

Can you describe the customers you serve in the U.S.?

We're in a lot of states. We work with partners. It can be church groups. In Texas, we have a group who are recommending formerly incarcerated people for whom we're probably the first and only source of capital. So we're really looking for those groups that wouldn't have another way of getting into business.

How has technology changed your operations and your lending?

The story of Kiva really is one of technology. It's crowdfunding where you get all these millions of loans and put a picture in a story and have everyone crowd in. Our platform continues to evolve. Under the hood, we use all kinds of modern fintech technology to make that quick and cheap and seamless.

For Kiva Protocol, that's really a pure technology story. We're building digital self-sovereign identity. We're building it fully open source. One of the most important things about how technology impacts this space is it's empowering for the individual. Ultimately people get to own their own data and that becomes a benefit to them to be part of an open and inclusive system.

Mobile technology and fintech have really exploded in places like China, Southeast Asia and Africa. How do you view that change?

We feel very positive and hopeful about that. I have a great deal of hope that as this technology gets to the lower-income areas in these countries, we're going to see more choice and lower costs.

And the mobile phone has really dramatically changed these economies.

It's only just starting, I think it has a huge distance left to run.

Are there fintech trends that worry you?

Given what we do at Kiva, what continues to be worrisome is that with a lot of the new startups there continues to still be too much focus on the middle and top end of the market, and not enough focus on like the very lowest income consumers. When we look at the type of people we lend to, we see a multitrillion-dollar market of a couple of billion people who haven't been properly banked yet. They don't have a bank account or are operating at basically a cash economy. Transactions are expensive.

You are in areas where there's conflict. Can you describe how that affected your operations?

We operate in many countries where war is a reality. One of the big trends we've seen over the last few years is an increase in refugees and internally displaced persons. Some of that's a function of war. Some of that is a function of climate change. Some is a function of just terrible economic conditions. Through the crowdfunding platform, we've lent about $20 million to refugees. We published a white paper demonstrating with data they have the same repayment rate as the regular population. Then we recently raised just over $30 million to fund financial institutions that lend refugees. So we're really leaning into this space hard.

What do you expect to happen this year as we come out of the pandemic?

Over the past 15 years, when we look at our data, what we actually see is that there's a huge demand and search for capital coming out of a period like this. So we expect over the course of 2021 to have a huge, huge demand. What we're really focused on is getting the message out about crowdfunding raising more institutional funds, basically getting more funding into the system. Where we are in California, as businesses start to think about getting back on their feet, the No. 1 constraint is getting enough capital. Sometimes it's a fairly small amount of capital to get back into business. A $20,000 or $50,000 loan can make all the difference to a local business.

What are the biggest lessons for you when it comes to crowdfunding? You were among the first crowdfunding sites. What mistakes have you learned from?

Whenever it gets complicated, or whenever it gets abstract, that's definitely a mistake. When we get back to the simplicity of it's a person, and it's a story, and it's a direct action you can take to have an impact on a life, it works great. Every time we get too clever, that's not so good. The other thing is over a 15-year period, the expectation of the consumer changes radically. What we all thought was a good web page in 2006, these days expect that mobile apps with animation and connect every credit card in one second, and Apple Pay should be accepted, and all of that.

Why did you join Kiva?

I spent my career either doing finance or technology. I wrote quantitative trading algorithms for a hedge fund for a little bit. I've always wanted to do something really pure and good, if not me. It took me back to my experience in Nigeria talking to low-income focus groups. Kiva was the first time I actually saw these skills put to use for something that was good in the world. It's been a real gift to me to be part of Kiva.

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