This is Part I of a two-part series with Shivani Siroya, Founder of InVenture Fund. In this interview, Shivani talks about the origins of her micro venture capital organization and explains how her work in investment banking and health economics influenced the development of this new model.
In addition, Shivani shares the story of a successful pilot program in Bamako, Mali, as well as some background on how InVenture Fund works and how partners are provided with incentives. By helping businesses to grow, InVenture Fund helps reduce poverty by supporting the growth of the what is often referred to in an economy as the “missing middle”.
For Part II of this interview, be sure to check out, “Part II: Interview with Shivani Siroya, Founder of InVenture Fund | Microfinance vs. Micro Venture Capital: How Do They Differ”.
Behind-The-Scenes: InVenture Fund
Katrina: So here I am with Shivani of InVentureFund. Thanks so much for joining, Shivani. What is InVentureFund, and how did you get started?
Shivani: InVenture Fund is an online platform that allows everyday investors to invest in developing businesses in developing countries or in the U.S.
Katrina: How do you differ from Kiva and other microfinance platforms?
Shivani: So we’re looking at people who have already gone through microfinance for the most part. We look at 1 – 3 cycles of microfinance as our client base. It’s not necessarily the poorest of the poor. This is that next graduation, that tier that goes after microfinance. It is that “missing middle” and group of individuals who now have that ability to expand and grow their business and then actually look beyond just themselves.
Katrina: Can you share some success stories from the field?
Shivani: I think a really great example is our program in Mali. We are partnering with Project Muso in Bamako, Mali. A story would be that the twelve women who are in our cooperative, the money that they’ve made through the profits of their textile business enabled them to fund another hundred people having access to the health care clinic in Bamako. Now they have this recognition from their community. It’s that they did this. It’s not that an outside service came in and provided the aid to grow the clinic. It’s actually the women themselves.
Katrina: How do you identify partners?
Shivani: We kind of have a very strict due diligence process. It’s very rigorous. We’re actually asking them now to track these investments for us, really track the growth of these businesses. Every player that’s involved is incentivized by how well this business owner does. So in picking our partners, we have to ensure that our partners agree with that mission. We make sure they have a lot of financial tracking systems on the ground. We also look to make sure this is not a very small microfinance or NGO, and that they have it running for at least five years – and there also not a huge microfinance institution or NGO because then they may not take the time to really work with our clients.
Katrina: How do you provide incentives to your partners? And can you provide some examples of ways in which you incentivize your partners? What does that look like?
Shivani: So when we initially start working with them we do give them a flat fee to begin working on our model per client. And then at the very end of each cycle, we actually give them a portion of the profits. So just as InVentureFund would get paid through the profit-sharing model, the MFIs are also getting a portion of those profits. They are a non-profit institution for the most part, so this is a new source of income for them too.
Katrina: (InVentureFund’s model requires loan recipients to invest in their local community.) The entrepreneur that is invested in has to invest in their own community: what percentage or portion of their proceeds goes toward those social services?
Shivani: We kind of leave it open to being between 3 – 5%, depending on the size of the business. But right now, everything has been 5% across the board.
Thank you, Shivani, for your time to meet for this interview.
Shivani Siroya | Founder, InventureFund
About: InVenture Fund is a micro venture capital fund that empowers businesses to lift their communities out of poverty. Website: www.In VentureFund.org