Mobile business tools for micro-entrepreneurs in emerging markets
Our first product is an educational and accounting program that runs on mobile phones that we designed with and for BOP micro-entrepreneurs. The application allows shopkeepers to track revenues, purchases and costs, and in return they receive personalized recommendations and access to value-added services. All of the information on the phone synchronizes wirelessly with our servers in real-time.
Sobre Você
Sobre Você
Nome
David
Sobrenome
del Ser
Website
Your Organization
Frogtek
Country
México, DIF
Sobre Sua Organização
Nome da Organização
Frogtek
Página da organização na internet
Telefone da organização
Endereço da organização
País da organização
Estados Unidos , NY, New York County
Organization Type
Private Institution
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Your solution
Name Your solution
Mobile business tools for micro-entrepreneurs in emerging markets
Describe Your Solution
Our first product is an educational and accounting program that runs on mobile phones that we designed with and for BOP micro-entrepreneurs. The application allows shopkeepers to track revenues, purchases and costs, and in return they receive personalized recommendations and access to value-added services. All of the information on the phone synchronizes wirelessly with our servers in real-time.
Country your work focuses on
If multiple countries, please list them here. If your solution targets an entire region, please select it below
Today, we are in Mexico and Colombia but plan to expand in Latin America in the next few years.
Region(s) your solution focuses on:
Latin America and the Caribbean.
Range of turnover in your target firms, in USD
Less than $1 Million.
Average turnover in USD of your target firm
Number of employees in your target firms
Fewer than 5.
Average number of employees of your target firm
2
Specify the size, average and range of expected loans or investments in each target firm
We expect to mobilize financing for micro-entrepreneurs by providing banks and microfinance institutions with accurate accounting records about their performance, which spares them the need to identify candidates, visit in person and estimate their cash flow. The micro-retailers population is a huge market for microfinance companies and they are good customers that have real assets, cash flow, and solvable needs.
What stage is your solution in?
Em execução entre 1 e 5 anos
INOVAÇÃO
What makes your innovative solution unique?
We believe our approach is unique for several reasons.
• Our approach is based on the fastest-spreading technology of all time: the mobile phone (which has been furiously adopted by people at the BOP). But we place ourselves at the cutting-edge of that diffusion by using touch-screen smartphones (which have a more user-friendly interface) and a data connection
• We design our products together with our clients, using Human-Centered Design (which has been rarely done for technology products for the BOP)
• We align the incentives of both large and micro-players: mobile operators sell more data plans, large companies understand their market better via market research that we collect from shopkeepers in an anonymous fashion, and micro-entrepreneurs do their job better and earn more income
• We not only build software tools but also provide the educational content required to take advantage of them. As the content is on the mobile phone, it can be reviewed in situ, available whenever and wherever the end user wants.
How does your proposed innovation leverage public intervention in catalyzing private SME finance?
Many micro-entrepreneurs are denied loans because do not keep reliable sales records, making it nearly impossible for finance institution to accurately assess whether they are good candidates for credit. Our tool provides accurate, real-time sales information which finance agents can use not only to assess credit worthiness but also optimize interest rates, promote new products and track repayment.
Moreover, micro-entrepreneurs also have difficulties in their relationships with suppliers (e.g., shopkeepers asking to purchase Coca-Cola products on credit). Our tool can help strengthen this relationship as well not only by providing sales information as well as providing a platform for new digital products such as mobile payments.
What barriers does your proposed solution address?
Asymmetry of information, Informality, Lack of collateral, Lack of financial capacity, Lack of SME access to skills / knowledge / markets, Unavailability of financial products tailored to SME needs, Lack of institutional capacity of financial intermediaries, High transaction costs for financial intermediaries to serve SMEs, Lack of competition / incentives for financial intermediaries to serve SMEs, Underdeveloped local capital markets (term local currency funding, exit options for SME equity), General barriers to SME development related to investment climate, Lack of financing to women entrepreneurs.
If you checked any of these barriers, describe how your solution addresses them
Our product relates to all of these challenges and hence we will respond to each in turn.
a) Asymmetry of information
Inefficiency is a big reason why the poor pay more for the same products and services that the rich consume. BOP retailers and distributors run less efficient businesses, cannot access credit and do not have access to technology. Our tool addresses all of these needs by providing a technology platform that helps improve their efficiency as well as connects micro-entrepreneurs to business services.
The shopkeepers can now provide complete financial records to their lenders, minimizing the asymmetry of information.
b) Informality
Our product relates to informality in two major ways. First, by providing a platform that collects a vast amount of information on the informal channel, we are providing a rich data set that we can use better understand this sector and design policy interventions. Second, as we are a technology platform, its is possible to connect informal communities with different stakeholders so they are no longer “hidden” from view.
We can also simplify the tax calculations for the shopkeepers, as they won’t have to go through all their purchase orders.
c) Lack of collateral
Good accounting records that show a stable, profitable business can help reduce risk for financiers, and hence minimize collateral requirements.
d) Lack of financial capacity
Training and educational tools are a core part of our product, and our technology platform allows use to use multiple media types such as video, flash cards, interactive text and personalized recommendations, among others.
e) Lack of SME access to skills / knowledge / markets
As we are creating a digital platform, we connect micro-entrepreneurs directly to a wide range of stakeholders such as educational institutions and suppliers.
f) Unavailability of financial products tailored to SME needs
Our product provides sales information on thousands of shopkeepers, and by working directly with finance institutions it will be possible to create new products.
g) Lack of institutional capacity of financial intermediaries
h) High transaction costs for financial intermediaries to serve SMEs
i) Lack of competition / incentives for financial intermediaries to serve SMEs
j) Underdeveloped local capital markets (term local currency funding, exit options for SME equity)
k) General barriers to SME development related to investment climate
By reviewing accounting records for shopkeepers, financial intermediaries have cost-less access to thousands of potential clients and can also monitor their loan portfolio more easily.
l) Lack of financing to women entrepreneurs
If a woman is running a good business, and that is reflected in her accounting records, getting access to credit should be easier.
Impacto
Provide empirical evidence of your proposed solution's success/impact at present. If your project is in the idea phase, please provide evidence that speaks to its potential impact
We are still in an early stage so we don’t yet have conclusive information on the direct impact of our products. However, we have lots of anecdotal evidence: our pilots have shown that our users enjoy the clearer information about their business and the degree of enhanced control it brings. Moreover, we have seen all of the shopkeepers in our pilot project review reports in the phone before making decisions about purchasing new inventory.
Furthermore, we have already seen a renewed sense of pride in working with cutting-edge technologies, reinforcing our belief in Mohammad Yunus quote: “the mobile phone is a card out of poverty”.
In the near future, we will have enough scale to generate an almost overwhelming amount of detailed quantitative information about the profitability of shopkeeper businesses before and after target interventions (e.g., launching educational content, establishing direct links with suppliers via mobile technology, etc.)
How many firms do you expect to reach?
This year we will reach 100 shopkeepers. In the next year, we plan to reach hundreds of shopkeepers in Mexico and Colombia. In the next few years, we expect to be working with thousands of shopkeepers throughout Latin America and possible other countries.
What is the volume of private SME finance you aim to catalyze?
At this early stage we are focused on scaling up our business and increasing the number of shopkeepers using our application. Consequently, we have not modeled out all of the secondary effects just as the volume of funds flowing between investors and our shopkeepers.
What time frame will be required to reach these targets?
See answer above
Does your solution seek to have an impact on public policy?
Sim
What would prevent your solution from being a success?
Financing and partnerships are our two biggest challenges. Regarding financing, the first stage of our business model is deploying phones in order to create a network of users; the second is leveraging the information collected to create and sell products. However, this obviously means our costs are front-loaded while our revenues come later.
We also need to work with partners who can help us reach shopkeepers and generate value with the data. This is less of a risk as we have seen a lot of sales interest from potential clients, but obviously without customers we don’t have much of a model.
Temas relacionados à inscrição
Describe the social impact of your innovation. Please include both numbers and stories as evidence of this impact
Consider the micro-retailer that is nearly ubiquitous in Latin America (500,000 alone in Colombia and nearly 1 million in Mexico, the two markets where we operate today). They sell most of the food and drink consumed by lower-income populations (there are few supermarkets in poor neighborhoods) and, moreover, they are important community leaders.
These shopkeepers need to make a lot of important business decisions ever day -- what products to carry in stock, what prices to charge, how much inventory to maintain, and when to give credit to customers, among others. Yet more often than not they lack the business training and networks to make efficient decisions.
First and foremost, our product can help these micro-entrepreneurs optimize their businesses by providing them with a clearer view of their business, education, and personalized recommendations. Moreover, by adding new products in the future such as mobile banking we can provide a service that will attract more customers.
At the moment we are still in the pilot stage but our initial shopkeepers are already very pleased with our tool. They are using the reports in the phone when deciding whether to order new products, analyzing their performance on a daily basis and constantly reviewing their accounts receivable, among other advantages. We currently have 15 shopkeepers using the phone but this will expand to nearly 100 in the next few months via an upcoming project with a microfinance company.
SUSTENTABILIDADE
List all the funding sources that are required for the sustainability of this solution
At the moment we are an Angel-funded company, and like all start-ups we need sufficient funding to achieve scale and reach break-even. At the moment we estimate we need another $2-$3 million in financing, preferably from a range of investors who can provide contacts, sales leads and business advice.
Demonstrate how your proposed solution has the capacity to graduate from dependence on public finance. What is the time frame?
We are a for-profit company and our management team has extensive private sector experience. Once we have scale we will be able to sell a wide range of products which should make us profitable.
Demonstrate how your proposed solution will survive a potential loss of its largest private funding source
Losing one of our biggest investors would be tough. However, as a start-up with an attractive business model we have been in regular touch with a wide range of potential funders and could hopefully sign a replacement deal quickly.
Please tell us what kind of partnerships, if any, could be critical to the greater success and sustainability of your innovation
First, we have learned through experience that it is not efficient for us to sell our technology directly. The reason is that we are looking for a sub-group of the shopkeeper population – a younger and more entrepreneurial profile – and many suppliers already have their retail partners segmented for marketing and sales purposes. Our business model is to piggy-back onto these networks. Second, while shopkeepers are the users of our product, microfinance institutions and packaged goods companies will be the customers, purchasing marketing research reports and paying us a fee every time they want to access our network (e.g., sending advertisements).
Are there non-financial issues that could threaten the sustainability of your proposed solution?
There are a few – government intervention, problems with the technology and/or data network – but nothing that we consider insurmountable.
Please tell us if your proposed solution aims to scale up through a high growth sector, expand immediately to multiple sectors, and/or scale up geographically
We plan to deploy our technology by working in partnership with companies who regularly visit shopkeepers – consumer packaged goods companies, NGOS, and microfinance institutions.
There are literally millions of shopkeepers in Latin America so we expect to focus on micro-retailers for the foreseeable future. However, once we have traction in our pilot countries (Colombia, Mexico) we may expand to other regions as opportunities present themselves.
 | 90 weeks agoIlgar Taghiyev said: Dear Mark. I really liked your idea, it is unique and practicatl. I have also enterd idea here where we can apply your technologies. I ... about this Competition Entry. - leia mais > |
| 90 weeks agoMark Pedersen updated this Competition Entry. |
| 90 weeks agoMark Pedersen submitted this idea. |