This is Part II of a two-part series featuring Shivani Siroya of InVenture Fund. In Part II above, Shivani explains the difference between microfinance and micro venture capital. In addition, Shivani talks about how she started InVenture Fund, providing a testament to the virtues of persistence and constant concept iteration when starting a new venture. For Part I, be sure to check out “Interview with Shivani Siroya, Founder of InVenture Fund | How Micro Venture Capital Helps The “Missing Middle”.

Behind-The-Scenes: InVenture Fund

InVenture Fund is a micro venture capital fund that empowers businesses to lift their community out of poverty.
Katrina: So here I am with Shivani of InVentureFund. Thanks so much for joining, Shivani. How is micro venture capital different than microfinance?

Shivani: I think microfinance is a really great model for giving people the ability to start, to at least cope with their current situation. And it brings them to a level that they did not have the opportunity to have before. But what I started to see was that a lot of the borrowers were already starting to take out multiple loans. So they were already creating this kind of package for themselves. But the difference was that what they were doing is taking out a loan from one institution, another $300 loan from another institution, and creating a product that was like $1200, but at various, different interest rates. And there’s no way somebody can keep track of that. So, I started to see the need for at least something larger.

Katrina: What is your background, and how did this influence the model?

Shivani: My background is in investment banking and health economics. And I started to think of, from an economic perspective, how do businesses grow? By only having the ability to take out a very small loan each time, I’m actually never going to be able to expand my business. It doesn’t even just come down to the size of the loan, but really just the way I’m paying back things. When we look at venture capital models, or angel investors, they’re really allowing that business to full-fledge grow. And then at a later date, they say, ” I would like to see a return.”

Katrina: What are your thoughts on community development?

Shivani: When outside parties come in, #1 we don’t know the community as well as the people within it. And if we’re putting in money, at some point we may take that money back out. So if the community is being helped by somebody inside the community, that’s way more powerful and much more sustainable and long-term.

Katrina: Where exactly were you? Were you in India when you had this experience?

Shivani: Yes, I was in India.

Katrina: Okay, so you were in India, and you witnessed first-hand the mechanics of microfinance and some of the gaps. And then you thought of this model. How did you bring a team together to get InVentureFund up and running?

Shivani: It was really fun, actually. I came up with this idea and called one of my friends who is on our team and I told him. And he was like, “yeah Shiv, I’m pretty skeptical.” He worked at one of the big NGOs in Washington, D.C., and he was doing a kind of partnership model already and had been working in development for awhile. And he was like, “I don’t think this is going to work – you’re going to have to convince me.”

I’d work on the model more and send him an executive summary and he’d be like, “no, still don’t buy it.” And I just started shopping it around and getting a lot of advice.

Start-Up Lessons: 1) Being persistent can pay off. 2) Keep iterating the model.

Katrina: Can you share: what have been some challenges along the way that you’ve encountered?

Shivani: It takes a lot of organization. It’s not just having this great idea. But it’s like, “okay, I have this great idea, and I’m excited about it, but we have to be as a group constantly focused on what we’re trying to do. Even though this is a learning process for us as a new organization, we now have to take responsibility for the fact that we are now investing in real-life businesses and real lives. We can learn but we also have to be very direct, and very focused.

The other challenge is that we are also in a new space. So, microfinance is out there. And a lot of people are starting to learn what venture capital is. And now we’ve created this new space which is micro venture capital. So, I think the challenge now is really getting people to understand why there is a need for this kind of model now.

Katrina: How have cultural differences influenced the model? Have you found in your experience in these three different pilot programs in the three countries to-date, what kind of cultural differences have you experienced and how have you learned to improve the model as a result?

Shivani: I think the big thing is that because most of these people were microfinance clients, they are very used to the fact that they do pay on a weekly basis. So when we told them that they don’t have to pay us back this week, I think to them that was a complete shock.

In one of the pilot programs we realized that they actually don’t know what to do with the extra money. So, they got the extra money and started to spend it on things that were not necessarily necessities or related to the business. So the money was just going away.

And so we were like, “okay, we learned from this” – and we created savings accounts. So little things like that, that culturally we didn’t know. I think the big thing was really convincing them that re-investment worked. And I think that what we learned is that it can’t be just that we say, “okay, you give 5% to the local community.” It really had to be something that, we recognized their effort. One lady said something about her being called a “hero”.

Katrina: Now what is the model for scaling this?

Shivani: Well, #1 is that we want to start a U.S. pilot, and #2 is that now that we’re in three countries, I think we should focus on that, and continue growing within those three countries.

Katrina: If many people are accustomed to the traditional microfinance model, and now you have this kind of next-tier investment model, that takes time to train people. So how do you scale the training?

Shivani: We put all our business owners into groups. So, as they’re being trained, they’re being trained as a group. Yes, we do customize the program a little bit depending on their type of business, but really our goal is create support networks for them as well. So it’ll be about ten people per group. So ten people will be starting a program at the same time. So it makes it a lot easier to scale. What we eventually see ourselves doing is having InVenture Fellows on the ground who will help with that process. What we want to do is use technology, make videos, etc., that makes it a lot easier for them to understand, and it is less time-consuming, and it’s a little bit more entertaining.

Katrina: Do you have any parting insights that you’d like to share?

Shivani: I have a favorite quote: “if you think you’re too small to have an impact, try sleeping with a mosquito in the room.” A lot of times no one thought that these average business owners, these small business owners, could really do something bigger than themselves. And it’s really giving them that ability to see that not only can they be successful, but with a very small action, they can do something that has a huge impact.

Thank you so much, Shivani, for 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.InVentureFund.org

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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