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• November 16, 2014

Kiva Zip: Crowdfunding to Success

2Agenda

Kiva Zip Introduction/Role of a Trustee

Trustee: Microfinance at Berkeley

Trustee: Germinal Fund

Q&A

3Welcome to Kiva!

Kiva leverages the internet and a worldwidenetwork of microfinance institutions to

allow individuals to lend as little as $5 to help createopportunity around the world.

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4

1,200,000+ Lenders

1,300,000+ Entrepreneurs

$560,000,000+Loans

99% Repayment Rate

Kiva’s Impact to Date

5In 2009…

“Why can’t I lendto someone in my

Lenders own backyard?”

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7How the Kiva Zip model is different

Lenders

Entrepreneur

In the Kiva Zip model, we send theloans directly to the entrepreneurs

8What’s the problem?

Small businesses create

U.S. jobs

2 out of 3

Small businesses hired just 1 employee

1 in 3Full employment achieved ifBanks reject

small business loan applications

7 out of 10

Access to capital

constraint to growth reported by small businesses

Top 3

9Imagine 20 aspiring entrepreneurs with 20 dreams

10Right now, traditional banks may only be serving 1…

11…CDFIs might help serve a couple more…

12With Kiva Zip, we want to light up all 20

13Kiva Zip is the first rung on the financial ladder

Just as MFIs are expanding access to entrepreneurs underservedby banks, so Kiva Zip is expanding access beyond MFIs

14We have three principle objectives for Kiva Zip

1 Increase access to capital for small businessowners who might not otherwise qualify for

microloans

2 Use technology to lower the cost of loancapital for borrowers

3 Connect Kiva’s million lenders more closelywith the borrowers they are supporting

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Lend• Support a U.S.

entrepreneur with financial and social capital.

Borrow• Access a 0% interest Kiva

Zip loan to invest in your business.

Endorse• Become a trustee

and enable an entrepreneur to access a Zip loan.

Three Aspects of Kiva Zip Model

16What a Kiva Zip Loan Offers

• Kiva Zip loans can be used for any business purpose• Purchase inventory, invest in equipment, expand product lines, hire

staff, marketing, advertising, etc.

• Small size, short term, 0% interest, crowdfunded loans.• Most first time loans are $5000 or less, subsequent loans can be up to

$25,000

• Kiva Zip borrowers must be endorsed by a trustee • An organization/individual who can vouch for their business

17Trustees

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Over 400 trustees throughout the country have endorsed one or more of their clients or community members for a Kiva Zip loan. This number is growing by 20-30 every month.

Types of trustees include:

Technical assistance providers

Non-profits

Business incubators

Small businessesReligious groupsStudent clubs

Local governmentsBusiness mentorsEtc.

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Trustees play a crucial role in the Kiva Zip model

They never handle the money…

…And they bear no financial risk in the case of loan default…

…But they are the principal means by which we: Source and vet borrowers Educate borrowers on the Kiva Zip program Follow-up on delinquencies Provide technical assistance to borrowers Reach the bottom of the pyramid

The Role of Trustees

20What do trustees do?

Trustees play two key roles on Kiva Zip:

Help us keep in contact with these entrepreneurs over the course of their

loans

2

Find entrepreneurs with rock solid

character who would benefit from a 0% interest microloan

1

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EmpowerEnable your clients to engage with their crowd of lenders, and access interest-free capital they otherwise could not.

EngageEngage with Kiva’s network of a million lenders. Showcase your impact and build awareness of your organization.

PromoteBenefit from the positive publicity and PR that collaboration with Kiva’s brand can bring.

FundraiseDemonstrate tangible impact to potential funders in terms of loans endorsed, revenue generated, and jobs created.

What’s in it for trustees?

22Being a Trustee- Endorsement

23Being a Trustee- Fundraising 25

83 lenders

$5,000

9 days

24Over 100 Bay Area trustees have endorsed a Kiva Zip loan!

Trustee # of loans $ of loans % repayment rate

15 $78K

9 $85K

8 $38K

7 $35K

6 $31K

6 $27K

5 $32K

5 $26K

5 $4K

4 $20K

4

4

$23K

$16K

94%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

100%

25Zip’s Impact

650 Borrowers – 400 Trustees – 25,000 Lenders

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Who We Are:

The Germinal Fund• The Germinal Fund is a student-run nonprofit

that serves the needs of small local businesses through a combination of microlending and hands-on training/consulting services.

Who We Are: The Germinal Fund

28What Makes a Good Borrower?

• Strong Character: Trustees should be confident in the borrower's commitment to repay the loan.

• Business Skills: Trustees should be familiar with the borrower's business plan and strongly believe in its viability. Borrowers and trustees should have a clear understanding of how the funds will be used.

• Social Impact: The borrower's business should have a positive effect on the community.• Capital begets capital.

29Successful Borrowers Have…

• Pre-determined plan: Knowing exactly where they will spend the money and how it will specifically benefit their business.

• Strong Networks: Borrowers are most successful when they have personal and professional ties to their community and a willingness to use them!

• Willingness to be positive and take an active approach: Successful borrowers fundraise and market themselves through all available outlets.

• Compelling stories and photos: Lenders are drawn to borrowers with interesting stories, great products and compelling photos.

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How to Engage Borrowers

• Key: Connecting with the community

• Canvassing

• Community and Municipal Institutions

• Referrals and Connections

How to Engage Borrowers

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Next Steps - Connecting

• Ask for their Budget: This helps determine where they are in the planning stage of the process.

• Credibility & Character: A borrowers responsiveness and responsibility are key.

• Test their Intentions: Establish next steps and give action points.

Next Steps:- Connecting

32Case Study – Whey Station

Mobile Food Truck

33Results

Successfully fundraised a $5,000 loan through Kiva Zip

Provided…New WrapParking PermitsNew GeneratorFood Smoker

34Microfinance at Berkeley

Microfinance at Berkeley is the first campus Kiva Zip Trustee. We were founded in 2012 by a Kiva Fellow and UC Berkeley student.

The Statistics

• Tier 2 Kiva Zip Trustee

• 5 Loans

• $21,500 in Loans

• 100% Repayment Rate

• 15 Members

Our Mission: We seek to provide under-served entrepreneurs with capital that may be inaccessible through traditional financial institutions.

35MFB: Our Clients

Our clients include soap makers, goat owners, international textile producers, and leather crafters.

36MFB: Client Case Study

Julianne - Faerie Goatmother

37MFB: Our Due Diligence Structure

Introduction, Application, Financial Analysis, Profile Development

1. Pre-Interview: 30 minute phone interview

2. Interview: Business Plan, Credit Report, information about business

3. Online Application: rough draft for Kiva Zip borrower profile

4. Financial Documents: sales records, bank statement, possible lenders, landscape photo for Kiva Zip profile

5. Endorsement: compelling reasons to lend

6. Profile: Loan Officer partners with client to create profile

7. Crowdfunding: 60 days – 15 day private period, 45 day public period

8. Quarterly Check-Ins:

Total time required to put a client online: 6-8 weeks

38MFB: Referrals through Partnerships

Berkeley Chamber of Commerce: Diane Rames

Berkeley Office of Economic Development: Elizabeth Garcia

39MFB: Outreach Events

Visit local farmer’s markets, pop-up markets, and other events to meet entrepreneurs and spread awareness about microfinance.

40MFB: Sign on to Listserves

Follow local start-up incubators, government agencies, and hackathons to stay updated on events and ways to connect with entrepreneurs.

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“Student,” “Volunteer,” and “Nonprofit” are terms that will lend you legitimacy.

MFB: Challenge 1 – Establishing Credibility

When starting out as a Trustee, it is key to establish your credibility, and Kiva Zip’s credibility as a program that provides 0% interest $5000 loans.

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The Kiva Platform gives borrowers access to over 1 million lenders, all of which are interested in supporting social enterprises and new businesses.

MFB: Challenge 2 – Pitching the Loan

Online Marketing Potential Customers Social Media Expertise

Supporters: Special Forces Grade

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Lending Teams are targeted, pool many members’ funds, and can launch a borrower’s crowdfunding campaign or finance it to 100%.

MFB: Challenge 3 – Funding the Campaign

Lending Teams are cohorts of lenders who band together based on common backgrounds, geographic focus, passion for a social cause, industry, or any other shared lending goal.

Lending Teams are a function of Kiva, but Lending Teams can also make loans to Kiva Zip borrowers. Get in contact with the Lending Team Captains and request that they spotlight your client.

44Q&A

Any questions?

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• sarah.taylor@fellows.kiva.or

g

Sarah Taylor

esther.han@berkeley.edu

Esther Han

Thank you!

brandnerjason@gmail.com

Jason Brandner