Tell us about the social impact of your innovation. Please include both numbers and stories as evidence of this impact
InVenture Fund is currently working to measure the impact of our first three pilot funds, with partners Green Microfinance in Chennai, India; Key Credit Microfinance in Accra, Ghana; and Project Muso Ladamunen in Bamako, Mali. InVenture's long-term, debt-free capital investments have enabled entrepreneurs in each of these communities to grow their businesses without worry of risk or cycles of high interest payments. InVenture has also freed them to choose their own impact—in other words, the social initiative in which they'll reinvest a portion of profits. In Mali, InVenture has invested in a women's business cooperative that creates textiles from Bogolan cloth. InVenture Fund invested into the women's cooperative rather than issuing a loan to the women, which allowed them to produce more products and concentrate on expansion. InVenture Fund also found a new market for these products, so the cooperative was able to generate more profits. The cooperative, in turn, now has more money to invest back into their own business and is also reinvesting 5% of profits in a community health clinic. In the two months since the pilot has launched, the 30-women-owned cooperative has funded health care services for five members of the community for an entire year—all with just 5% off profits, or approximately 45 USD. That the women now have money to put back into their business—allowing them to move towards sustainability—and have been able to make a measurable impact on their community is proof that our model works.
Problem: Describe the primary problem(s) that your innovation is addressing
InVenture Fund was founded in October 2009 with the belief that traditional microfinance models weren't doing enough to lift communities out of poverty. There are currently more than 75 million micro-borrowers worldwide, all living day to day on short-term loans with an average interest rate of 30%. Within this market, there are thousands of businesses with the potential to grow and thus help change their communities, but there are not many organizations serving this "missing middle". While numerous microfinance organizations, non-profits giving aid, and even large social venture firms are helping different and often isolated sides of the problem, there are few, if any, that address business growth and finance holistically and in collaboration with development efforts. InVenture specifically meets the needs of business owners who have surpassed microfinance and are now in need of something larger but still cannot access traditional bank loans. InVenture helps them bridge this gap and gives them the opportunity and ability to become leaders of their communities in the process.
Actions: Describe the steps that you are taking to make your innovation a success. What might prevent that success?
We have already established three pilot programs in Ghana, Mali and India. While all businesses and investments come with some risk, InVenture minimizes the risk by providing training and resources (in collaboration with our partnering NGOs) and closely tracking the businesses throughout the investment cycle. We develop Still, we work in sometimes unstable regions, and businesses can fail due to circumstances beyond their control. A second risk to consider is the longevity of our social reinvestment requirement. While we hope to create a culture of philanthropy or community citizenship among our entrepreneurs, we have know way of knowing whether they will continue to reinvest in their communities once they no longer need InVenture's investment help. We offset this risk by clustering our funds in specific regions rather than scattering them haphazardly throughout developing countries; this strategy enables us to build long-term relationships with each region and encourage the kind of grassroots philanthropy and development that is capable of building lasting change.
Results: Describe the expected results of these actions over the next three years. Please address each year separately, if possible
In the coming year we will continue to expand in our current countries (Ghana, Mali and India) and will be investing in 100 additional businesses. We will also begin new new operations in Mexico and New Orleans (in the U.S.) where we will begin investing in six businesses. By helping small to medium business owners in the United States as well as developing countries, InVenture can show that our model will work for for the developed and developing alike due to its emphasis on risk-free business growth and social reinvestment.
We also hope to continue to expand the educational and training component of our current investment program in order to ensure that our entrepreneurs are fully supported and are empowered to become the next generation of leaders for their communities. During our first year we will continue to develop our online platform to ensure complete tracking and transparency of the investor accounts so that we can show our impact and metrics on the ground. Lastly we will begin our InVenture fellows program in order to have proper data tracking and program evaluation happening on the ground.
In our second year, we will continue to focus on expansion within our five countries, and will focus more ensuring sustainability of our programs so that we can operate independent of outside funding and will look to ensure that all of our regions are self-sustaining. Again, we will focus on InVenture's operation structure and also continue to hone our online presence to bring a higher volume of investors to our platform. We will also work to create a fellowship-in-residence program where we can have visiting graduate students or professionals help us in new innovations or specialized models. Lastly, in our second year, we hope to invest in 1000 business owners in our five countries and begin operations in Pakistan and another US state.
In our third year, we will be financially sustainable and will be looking expand to large markets as well. Instead of our original investment range of only $1,000-15,000, we will look to larger investment amounts and will look to help start-up business owners as well—but only if they meet our criteria and assumptions and are willing to reinvest back into their communities. Lastly, we will continuously work on new innovations and further develop the support network for our business owners so that they can interact and support one another through our online platform.
If your innovation seeks to impact public policy, how?
Our model encourages grassroots community development, which we believe to be more sustainable in the long term, rather than top-down or external efforts. We also hope to continue to highlight the missing middle and its significance and potential for changing communities. If governments were to fund small-medium size business growth, these businesses could all be required to reinvest back into their communities, which would recycle the money back to the beginning. While microcredit continues to be an important source of coping, we hope that our model proves the viability of medium-sized business growth and encourages policymakers to address this need.