Microlending goes niche

I have become a slightly obsessive fan of Lend4Health, a micro-lending site that allows users to lend directly to families struggling with the bills for alternative treatments for their kids with Autism, Aspergers, and related conditions. It's simple, transparent, and meaningful.

So it's got me wondering how many other micro-sites are out there doing micro-lending. Kiva is the big daddy, of course, and is joined by other microfinance brokers like Rangde and Microplace. And there are small business lending sites like Lending Club.

But with the ease of mashing up apps like PayPal and ChipIn, it seems like anyone can get in the micro-lending game, and that this innovation, and people's desire to feel more connected with their philanthropic activity, can be taken in many new directions. After all, loans to parents with kids with Autism is a pretty niche area. Of course with the widening of microlending, there are risks (such as fraud), which is why I like Lend4Health because founder Tori is so transparent about what she's doing. But most things worth doing are risky, so I'm still on board.

I'm curious about groups and websites that are taking this approach in new, niche, directions, in the way that Lend4Health has. I can't find many examples, but I'd love to compile a list. Can you offer any?

1. Lend4Health. Category: health. Sub-category: Autism and related conditions (with potential to be applied to any health issue)
   
2. United Prosperity. Category: microenterprise. Sub-category: loan guarantees
3. Unithrive. Category: education. Sub-category: student loans (another uses donations rather than loans)
   
4. Lend4Peace. Category: microenterprise. Sub-category: Middle East.
5. Vittana. Category: education. Sub-category: Student loans (developing world)
6. Save Together: a "Kiva-like platform for matching the savings goals of the working poor"
7. (this one is in "idea" stage - see comments section): P2P lending site specifically focused on renewable energy - both green entrepreneurs and consumer energy lending in emerging markets

Kiva and white-label?
And while we're on the topic, I keep wondering what Kiva is up to. They've moved into U.S. lending, but the real jackpot is their platform. Now that start-ups like Lend4Health have shown that P2P lending can be niche, targeted, and high impact, disintermediating even microfinance institutions, it seems that a white-labeled Kiva platform could be licensed out to great effect. Revenue stream for Kiva: check. White label to protect Kiva's reputation: check. Opening up a well developed tech platform to new ideas, new innovations, and lending (and other) situations we haven't even thought of yet?: that would be incredible. I am hopeful Kiva is sitting on this idea and plans to roll it out in the near future, but that's just a guess.


JS.

* Update: If you have ideas about how that Kiva (or similar) platform could be applied to a niche capital need, let's hear them! I never would have thought of loans for families living with autism...what else is out there?

** Update: suggestions are coming in through the Comments section - I'm adding these to the list above as they come in.

** Update: Some cool models are being suggested via twitter (I'm @jessicashortall) - not all fit the exact description above, but are cool enough to note here:

1. Kickstarter: "a funding platform for artists, designers, filmmakers, musicians, journalists, inventors, explorers..."
2. Sell-a-band: Platform to allow indie bands to raise funds for next album directly from fans
   

social entrepreneurship Jargon Glossary

...courtesy of the Skoll World Forum 2009
jargon i'm hearing / seeing on twitter, and my best guess at what these terms mean.
i'm of the opinion that we won't really succeed from inventing new and complex terms, but i do like some of these.

1. ethonomics - a true neologism (just wanted to sound smart and say "neologism").
   
2. change agent - VERY popular term; seems to describe everyone from social entrepreneurs to people who like to hang around entrepreneurs. seems to best apply to people who would have a hard time describing their "job" in less than 30 minutes.
   
3. spontaneous community - nice way of saying slum (thanks to Jeff Chu)
   
4. gastropolitical awakening - using food to bring people in conflict together, catalyze change
5. interconnected prosperity - "Hope, joy, empathy, community." (Jeff Chu again)
6. primary constitutents - instead of "beneficiaries" or "clients". oh boy.

And in the "no idea what this means" category:

1. strategic apex
   
2. disconnected ambiguity

No offense intended! Just like to shine a light from time to time on the interesting gap between the words social entrepreneurs use (things like "I'm running out of money") and the words the wider world of thinkers and supporters use. I love language and all it can do, but not so sure about the erupting lexicon coming from the direction of the Western-world social entrepreneurship elite...

social enterprise: supply & demand

At the Skoll World Forum in Oxford, talking supply (of capital) and demand (of the same) for/by social enterprises.

Very interesting session in which we ID'd issues on the demand and supply sides...as follows:

Demand issues

• issue of role models - in some communities and economies, there are very few social enterprise role models to follow - similar dynamic can happen in economically deprived areas with entrepreneurship in general
• smaller pool of potential entrepreneurs due to many social enterprises providing low/no financial upside to entrepreneur
• historical antagonism by non-profit / charity sector to market models
• need for "pre-finance" mentoring and business services to get social enterprises bankable and investment-ready
• Many potential social entrepreneurs can't afford start-up - have low funds to begin with
  

Supply issues

• Assumptions by investors that all social enterprise = less money to be made
• Philanthropic funders are risk-averse, due to governance issues (boards), skills issues (grant officers not experienced in deal structuring)
• Grantmakers seem happier taking -100% financial return than -15%, 0%, or +2% (see point above for possible reasons
• Need more forward thinking philanthropists to seed fund - see last "demand" point above
• Exit - some of this can be addressed through quasi-equity, which almost no one is doing (Bridges, Venturesome, and Acumen are exceptions)

We also discussed what I call the "ecosystem" of social enterprise - something I see in London but not many other places. It involves activity and commitment from public sector, private sector, charities, foundations, media coverage, competitions to spark ideas, schools to teach SE, awards and prizes, and the whole spectrum of social finance from grants to commercial investment.

twitter, huh?

My husband asked me yesterday, "Why the hell do you use that thing?" (meaning Twitter). So I decided to write down why I use it and what I've learned from it so far...

First of all, a good article: http://blog.mrtweet.net/twitter-law-of-reciprocity

Second of all, my Twitter profile: www.twitter.com/jessicashortall

I should start by saying that I by and large am building my own little Twitterverse around people interested in social innovation.

The main thing I have learned over the past few weeks is that Twitter is action- and interest- oriented. It’s about utility. For me, Tweeting has/should have almost nothing in common with Facebook status updates: the audiences are completely separate. FB is for friends, and I post stupid/useless information. I don’t follow anyone on Twitter just because we’re friends. I am developing a kind of rule where I only tweet stuff that will have at least one of the following outcomes:

1. 
   
   It might be RT’d (because it is interesting/useful enough to be retweeted)




2. 
   
   It asks for people to do something they are able to do – introduce me to someone, send me a link, look smart, etc (A tweet like this might go: “Looking for experts in small business economic development. Can you intro me?”)
   


3. 
   
   It will amuse my Tweeps (This is fully dependent on you knowing who is following you and having kind of an ongoing dialogue going)
   


4. 
   
   It will create a conversation amongst the people who follow both me and the person I am tweeting about – kind of a more complex one. If I see a tweet from someone in Austin, I kind of have a sense of who else might be following them. By replying to their tweet publicly you can sometimes start a conversation amongst interesting people.



5. 
   
   It will build my general profile & personality in the Twitterverse. It should contribute to the story about myself that I want people on Twitter to know. That doesn’t mean it has to be completely focused – I do sometimes just Tweet what I’m up to, or a link to a news article, if it’s interesting enough. But those things also build me a 3-D profile. There are people I follow who I’ve never met in person, but now we have moved on to sharing emails and being “friends” because they or I seemed interesting and cool and useful enough to get in touch with. So, it will make me look cool/smart/interesting/knowledgeable/worth knowing.

Unless it meets one of the criteria above, I never tweet a “what I’m doing right now” update.
Now, on to Retweeting. Couple of recent observations:

1. 
   
   For me, Retweeting should still fill one of the three goals above.




2. 
   
   Twitter is about building social capital. If you RT someone’s tweet they are likely to remember and be grateful and pay more attention to your tweets. Also, it’s a nice thing to do. You should never expect a direct or even indirect ROI out of being generous on Twitter, but the irony is that being generous is the only way to get something out of it. So it’s selfish-unselfish.



3. 
   
   I will sometimes RT stuff that has little/no interest to me directly, if I feel like my twitterverse might find it useful.
   

In general, I think there is a chicken-and-egg situation which makes Twitter hard to really wrap your head around, and then once it clicks it jumps the value of Twitter up significantly. For me, it’s about slowly finding and building a community of followees (which I control 100%) and followers (which I don’t fully control) that I can build a sense of. What are the interests among this group of people, some of whom are connected to each other, some of whom are not? What resources might they have at hand, or 1 or 2 degrees removed? (I recently tweeted asking for opinions on box vs “tumbler” composters, and one of my tweeps introduced me to his wife, who recommended the best product – fyi it’s a tumbler) How can I be valuable to them?

And finally, I don’t follow everyone who follows me, and I unfollow people who annoy me. Like, people who tweet all day long, or whose tweets are boring/not useful/don’t follow my criteria above, or who will tweet 5 things within 2 minutes, which is not how you are supposed to do it at all.

Now, if you're reading this and you use Twitter, tell me what you know.

Social investing: back to Step 1.

Small but ambitious social enterprise, seeking capital, offering low returns and high risk. First-timer in the business world, no experience with debt or equity, great social impact.

The above isn't your typical "get rich quick" opportunity for an investor, but the demand and supply sides for social investment capital are growing. They just aren't always growing in the same direction.

I'm currently working on a brief guide for social enterprises in developing countries, to help them understand how the world of what I call "investment-minded funders" (everyone from venture philanthropist grantmakers to sub-market debt, equity, and quasi-equity folks) works. The experience of writing and re-writing and re-writing the paper to work for the audience is reminding me that, like it or not, those of us who like to talk about social investing (or PRI or MRI or whatever American foundations are calling what they like to talk about but hardly ever actually do) tend to act like this is a fully formed field, and that the demand side of this capital equation is up to speed on how this all works.

What we are really dealing with is a demand side that doesn't know a whole lot about how the supply side thinks and makes decisions. Some of this is experience - many social enterprise founders and management, globally, come from development, not business, backgrounds. Imagine a commercial start-up venture going seeking angel or VC funding, never having heard the terms "valuation" or "exit", and not really being sure what "equity" is all about. This is not a conversation that's going to go very well.

In the social enterprise context, there are some very sophisticated players out there, but the vast majority of social enterprises I see have a long way to go in understanding how investment-minded funders think, how they have to present themselves to these funders, how the relationship is vastly different from working with a traditional grantmaker, and why they would want money that expects more of them (repayment, for instance) than grants. I think part of the responsibility lies on the part of funders and intermediaries to help social enterprises understand what's going on. Of course, this benefits funders too - by improving deal flow and the quality of materials being submitted by social enterprises. And then it's up to the social enterprises to learn what is expected of them and provide it.

So I'm developing some thoughts on what has to happen on both sides of the supply/demand equation, in order for these guys to find somewhere to meet in the middle. My not-fully-formed list starts here:

What can social enterprises do?
1. Start getting educated. Set a goal for yourself to understand how equity investing works, how debt and lending works. Read definitions on investopedia.com. Ask stupid questions. If you don't have a board member that is/was a banker, venture capitalist, or "commercial" entrepreneur, get one, and make it clear to him/her that his/her job is to get you up to speed.

2. Research funders/investors you're interested in. Find out where they fund, what financial instruments they use, what social impacts they look for, and most importantly, what level of financial returns they expect. Then ask yourself whether that fits with your operation. I've been talking to a lot of social venture capital and venture philanthropy funders lately, and the #1 error they see, across the board, is social enterprises assuming that their fantastic social impact will somehow allow an investor to make an exception to the level of returns that investor is seeking. These social enterprises are not making the connection between the fund's responsibility to its investors or limited partners, and the return the fund therefore has to seek from the social enterprises it invests in. I have seen so much time wasted by social entrepreneurs convinced that "once they see the impact we're having, they'll be fine with making a little less money."

3. Read business plans (grant applications don't count). Lots of them, in any industry, social and not-social. The more you read, the better you will understand how they are structured and how much the language differs from grant proposals. Then keep yours under 20 pages. Keep the social impact stuff to one clear section, rather than peppering it throughout the plan. Figure out where you want to be in a few years and work backwards to explain how you will get there - operationally, strategically, and financially. Include both full and "snapshot" versions of your financials - a few years of history and 3-5 years looking forward. Profit & Loss, Balance Sheet, and Cash Flow. List your major risks and provide optimistic, "base", and pessimistic scenarios of your financials to show that you are prepared for the bumps in the road. And remember that most of the people who read your business plan will skip everything but the Executive Summary, Management Team Bios, Financials, and maybe Social Impact sections.


What do social investors and venture philanthropists need to do?
1. Transparency. Some social investors choose not to clearly and publicly explain what kinds of financial and social returns they're looking for. And they could all benefit from providing education to social enterprises to help them improve their approach.

2. Simplicity. This especially goes for venture philanthropists and social investors who come from the investing world. You might have worked at Goldman Sachs / McKinsey / Apax. The social enterprises who need your capital didn't, and they don't understand half of what you're saying. Help them out a little.


And the rest of us?
I have been asked a crazy number of times to "map the social investing landscape", for other funders, academics, and social enterprises. I am not a firm believer in the "social stock exchange" concept (mostly because I don't the approach of like putting "social" in front of every investment term we can think of, and calling it a day), but I do think it would be awfully useful to both investors and social enterprises if we had an industry-accepted (and supported?) space to map out all social investors and venture philanthropists in the field. There are a few who take a stab at this - xigi.net is one of them - but the key information is not easy to find, and the listings are not comprehensive. I would love to see a system whereby social enterprises seeking growth or capacity-building capital could answer some basic questions about cash flow, company structure, capital sought, financing instruments they're interested in, geography, and social impact areas, and be given a list of investors whose own criteria might make for a good match.

Gotta get back to the kind of work that pays the bills now

JS.

Back on the horse - in Austin

I'm trying to pick up blogging again after a long hiatus. Whenever I'm in transition I have a hard time thinking beyond my current reality, and we had a big transition in 2008 - my husband and I picked up our life in London and, in a several-weeks-long journey, made our way to our new hometown - Austin, TX. For a change, we followed our desire for good quality of life and sunshine, instead of careers, and it's turned out to be a great decision. This is a wonderful little city and we are enjoying getting to know it, along with our recently adopted dog, Blue.

I find myself in Austin at an interesting time for socially minded start-ups. Austin has the luck to have all the basic raw materials to be a leader in this field - it's a town of entrepreneurs, of socially conscious people, of great educational institutions, and of wealth. However the picture is still fragmented here, which I see as both a challenge and a great opportunity. I am of the belief that a community does not become a leader in this or any field without changes and innovations occurring in a number of areas, from public sphere to private sector (I blogged about this on Nell Edgington's blog, here). But there are also some promising signs that entrepreneurs are not sitting on their hands, waiting for Austin's infrastructure and capital markets to open their arms to social innovation.

Commercial companies like Blue Avocado and Greenling are following in the footsteps of older brother and local hero Whole Foods, building what they hope will be profitable businesses with clear social benefit embedded within.

Social enterprises are appearing, too, although they are still a bit thin on the ground here. English at Work is working toward financial sustainability, providing highly valuable services to employers by working with their employees to improve English skills. Emancipet, an organization with the mission to end unnecessary euthanasia of animals in Austin, earns a great deal of its budget through its spay, neuter, and wellness services. Southwest Key, a large Austin-based nonprofit, is making forays into income-generating social enterprise with a cafe and a maintenance company. If you're reading this and have other examples - anywhere on the social enterprise/social business spectrum, let me know!

Interestingly, as far as I know, most of the organizations above are entirely bootstrapped (with some grant funding for some of them). I applaud and support bootstrapping where it makes sense, but have to wonder what will happen when these start-ups (and others) reach that critical growth phase. For the highly commercial businesses, this might not pose a problem - if angels and VCs can see the business value and not get thrown off by the social impact, and if our economy doesn't completely implode, they should be able to get their hands on some capital. But for those who might provide investors with below-market financial returns, through equity, soft debt, or other mechanisms, where is this capital going to come from?

We seem to have a supply and demand problem that is highly chicken-and-egg. With so few social enterprises in Austin, can we go to funders and high net worth individuals with examples of success that might convince those potential investors to experiment with social finance? Or, if we can find some social investing pioneers to take a punt, will we be able to produce the deal flow to make it worthwhile?

My glib answer to these questions is Thank God for entrepreneurs. With some help and support, social enterprises will continue to appear in Austin, because entrepreneurs tend not to be hindered by the (lack of) resources at hand. But this is a big issue, and one that deserves intelligent attention. I'm excited to be here.

The "secret society" of people caring for their parents

Jane Gross writes an engaging and sometimes heartbreaking blog on the New York Times about aging in America. She also wrote this post: http://query.nytimes.com/gst/fullpage.html?res=9D05E2DF143AF931A15754C0A9679C8B63 which talks about the "secret society" of people who are suddenly, dizzyingly immersed in their parents' lives in ways in which they never imagined. Care homes, finances, health, ambulances, arguing with doctors and insurance companies, cajoling and arguing and shouting and pleading and worrying with their own parents about decisions big and small.

In this post Jane says that when she meets someone in the same situation as her, "These conversations generally end the same way. 'We should form a support group,' one of us will say. 'Who has time?' says the other."

There is so much latent need in this group for connections and peer to peer support, for "I've been there" advice and stories, for recommendations about planning, care, local services, dealing with siblings, giving oneself a break. The internet poses an interesting potential solution to the "no time for a support group" phenomenon. It takes away the constraints of time and space and lets people connect on their own schedules, anonymously if that's what works for them.

Drop me a line at info (at) supportmyparent.com if you're interested in participating.

This...

...says a lot about what's wrong with modern "news". This, from the people who brought you the "terrorist fist jab" comment (for the record, it's called a "dap"). Glib, offensive, distortive, completely beside the point, and racist. As a woman, I think it's ridiculous. As a person of moderate intelligence, I think it's insulting (did they think my attention wouldn't be caught if they had simply headlined it "Obama tells press: 'Lay off my wife'"?). As someone who cares about race in America, I think we ought to be more pissed off, and more worried, about stunts like this one. Here's why I am pissed off:

1. As a society we are allowing news outlets to treat us like idiots who will only respond to the most base, inflammatory, or ridiculous headlines and stories. And over time, if we let them, these very stories will fill the airwaves and newspapers and internet sites, and will crowd out anything with complexity and fine-grained subtleties and respectfulness, and slowly, slowly, we will become dumber and less able to see or care about that complexity - a self-fulfilling cycle.

2. This is racist, racist, racist, in that nasty 21st century way that winks at you and says, "We're not racist, it's just a cultural reference, don't be so sensitive!" And when you point out that it's racist, it says "We weren't being racits - you must be racist for thinking it's racist". This has no place on television, where we and our children can see it, and where our neighbors around the world can see it and shake their heads at our "race problem". It has no place in our conversations about who will lead our country, nor about the spouses of the contenders for that job. It should be condemned and it should make us feel disgusted. I do not subscribe to rampant political correctness. This is not that. I draw a line at insidious, faux-playful racism that does nothing but reinforce ugly stereotypes under the guise of humor and catchy headlines.

Not that they give a damn, but you can email them to complain at americasnewsroom@foxnews.com.