I think it was Wayne Gretzky who said that what made him a great ice hockey player was that he skated to where the puck was going to be.
Entrepreneurs should go where the opportunities are and funding is easy to obtain. With this budget, focus on “aam aadmi” , Mohammed Yunus getting the Nobel Prize etc. the timing for microfinance seems to be good. Within microfinance if the herd is focused on rural microfinance maybe there is an opportunity in urban microfinance.
There is lot of money available for microfinance in general and some specifically for urban microfinance. The team probably should contain a banker who understands consumer lending and it will probably end up setting up an NBFC ( Non Banking Financial Company) which I think requires minimum 2 crores capital to get a license from RBI. Getting funded is never easy so the team has to be top notch. I spoke to Caitlin Baron ( caitlin@msdf.org) who heads microfinance in India for MSDF ( Michael & Susan Dell Foundation) . They are keen to invest in startup NBFC’s who target urban microfinance and she is willing to engage in discussions with good teams even before they have a business plan to help them shape a business plan.
If the team is in Delhi – NCR I would be happy to engage as well.
It would also be interesting to hear comments from readers on whether they think this is a good area to get into or not.
- Community Platform For Ward 103 - November 22, 2012
- Municipal Elections New Delhi-16 days for rolls to close - October 15, 2011
- The next Facebook ? - September 17, 2011
Hi Sanjay
Can I get your email address. ?
You can email me at biyanip@gmail.com
Thanks
This comment is slightly off topic to the post but since this is latest post hence thought of posting it here.
Sanjay/Alok,
There are many events springing up like Barcamps/MoMos, but this new initiative called OpenCoffee club (http://entrepreneur.meetup.com/1056/) sounds very niche and interesting.
“an attempt to establish recognized, open and regular meeting places where entrepreneurs can meet with investors (and anyone else who fancies coming along) in a totally informal setting”
Why don’t you try some like this in NCR area. I will float this thought also to few folks in Bangalore to have one here.
Rajan
I think Urban microfinance is fraught with peril. Very harry potterish statement that, but there is too much effort required to cover defaults, and set barricades to stop the gatecrashers/party poopers.
The urban rickshaw driver, flower seller etc. are definitely people that can do with small finance, but how much? I know of one (personal) effort to give Rs. 100 to flower vendors early in the morning, with a promise to return Rs. 110 on the evening. Works very well once you know. But the element of scale trips you – once you build scale, you have no personal relationship, and without that the potential of default quadruples.
One other thought: the element that works best in rural microfinance is the shame game. The reasoning why women are the cornerstone of rural MF is that women give a lot of importance to izzat and reputation. Urban has the problem of anonymity and empathy meaning it’s difficult to find and shame your customers. Farmers rarely “run away” but the guy who drives rickshaws coming in from ghaziabad will be untraceable.
Rural works better because a) bigger tranches of money are required in a staggered manner and b) there is an element of stability in the producer zone (rather than the trader/service provider zone)
Again, I talk from the hip, having no personal experience in this matter. if anyone in the Bangalore area wants to get together to brainstorm, just holler here or contact me (deepakshenoy, gmail).
Sanjay,
your analysis of cost is very apt. In my view, any model that reduces the cost of capital + cost of transaction is the need of the hour.
Krish,
you are right that feeling lucky is a great driver to join MF group. I was interacting with some groups of muslim women in Bangalore last week, they told me that due to Allah blessings they joined this group and their life is going smooth after joining the group:-) Most of the women shifted from local “chit funds” and the peer pressure is very strong.
I am working on a model that facilitates cheaper and quicker funds to borrowers by partnering with microfinance organizations. We are currently in the second round of Stanford E-challenge and also got good response from microfinance industry. We are looking for a senior person from banking/investment/financial services background to join/advise/mentor the team. If anyone interested, plz mail me at siva.cotipalli@gmail.com or call +91-99453 88660. I can give more details on the current stage of venture.
Hi Sanjay,
I would like to meet to discuss the possibilities in this area. I have been remotely involved in MF for rural communities in Uttarakhand. However, it is become difficult to manage with all the travel and my other interests in Delhi. How can we get in touch to discuss more about it?
-vikas