This feature article and interview originally appeared on the San Jose edition of Examiner.com on May 28, 2011, at this link.
This article is part of Bonnie’s ongoing series of Silicon Valley business features.
MicroPlace is a small part of the world’s largest e-commerce company here in San Jose (eBay), but when it comes to providing real and metaphorical change for lives around the world, the company believes it has it in spades. I recently sat down with General Manager Ashwini Narayanan for a better appreciation of MicroPlace’s prodigious task at hand done right here in our Silicon Valley backyard.
The socially responsible MicroPlace, a PayPal company, connects ‘everyday investors’ with the world’s working poor. Thanks to its SEC regulated status, MicroPlace is the only website that allows investment via microfinance loans. The concept is simple: with as little as $20, an individual can invest in small businesses in developing nations, enabling impoverished people to grow both their businesses and their opportunities. Investors choose a MicroPlace-partnered MFI (microfinance institutions in far-reaching areas) based on geographic location, level of poverty or financial rate of return all from MicroPlace’s informative website. With options for rural areas, focus on women, green and fair trade, there are no shortage of recipients from Kyrgyzstan to Burkina Faso and everywhere in between.
Despite the ease of investing, the challenges are real and daunting. An estimated $250Billion is necessary to help 1 billion souls pull themselves out of poverty. Even a small amount of money can be prohibitive for the poor, preventing them from attaining upward mobility and investing in their future. To compound matters, traditional banking institutions do not lend such meager sums due to the substantial costs associated with lending, especially true in under-served areas. This creates a problem that is anything but inconsequential for the world at large.
Narayanan believes that the answers are found right here- in each of us. She has seen the world through many shades beginning with her upbringing in India and extending to her time at the renowned Monterey Institute studying international business and her considerable travels, all of which have created a lasting impression. Quick to note that charities and organizations fulfill acute needs, she emphatically believes that it takes more than any single option to end global poverty.
“We want to move people to invest,” Narayanan’s eyes glow as she reflects on the power of small sums of money invested in microloans. “We need to think outside of our current paradigm to find a solution that works for everyone. Microfinance is one piece of that puzzle. Instead of investing in a c.d. with a rate of 1.2%, wouldn’t you invest to fulfill an actual need and see the same rate of return, if not higher?” Given that the industry outperformed the markets last year, her sentiments have added benefit to those seeking new investment opportunities in a socially conscious way.
Purchased by eBay in 2006, MicroPlace fits the e-commerce giant’s sustainability portfolio nicely alongside the likes of World of Good and the eBay Green Team. Founded by social entrepreneur Tracey Pettengill Turner, MicroPlace benefited from eBay’s direction and regulatory status which enables the company to act as a regulated broker rather than a non-profit. This simple but meaningful difference is unique in the industry of microfinancing, empowering MicroPlace to appeal to people wanting to invest small sums that might provide them with an ROI while doing good at the same time.
A symbiotic unity between small philanthropist-gone-investor and the working poor ensues, effectively bridging the distance between borders and wealth disparity. Narayanan fervently believes that increasing people’s economic status will result in better education, access to healthcare and overall improved global relationships. She recognizes that market-based solutions to the world’s greatest problem isn’t an easy approach, however.
It is evident that she eats, sleeps and breathes her work, tackling the issues and grappling with the adversity that present themselves. She proudly points out a carefully framed photograph of herself with Muhammad Yunus, the archetype and founder of microfinance who later became a Nobel Peace Prize recipient. His work, as well as the work of other trailblazers, clearly inspires Narayanan and her crew to this day.
Despite the do-good, feel-good mentality, the industry as a whole has garnered some criticism. Some assert that exhorbitant interest rates charged by certain MFIs have not alleviated poverty but rather contributed to it. A big part of the problem is the incongruity in lending costs from place to place and a lack of any substantive standards- something without an obvious solution due to a great disparity in lending practices around the world.
Holding themselves accountable to their mission of helping the poor, MicroPlace comes back to their touchstone again and again. Reinvesting all of its profits, the company has a rigorous set of best practices and their partnered MFIs go through a lengthy vetting process to ensure people in even the most rural areas have access to viable loans that ultimately help achieve the goal of eliminating poverty. Narayanan’s enthusiasm for tackling these problems is evident to anyone who spends a minute’s time with her as she grapples with the challenges of our interdependent world.
“We want our investors to understand the broader implications,” Narayanan says, keen to address what she refers to as ‘growing pains’ within the industry. “As we get more social metrics, we make all of the information available to our investors. The world is interconnected like never before. This is truly a democratization of development that is constantly changing. We are ultimately accountable to our investors and the recipients.”
Profiting cannot be the ultimate goal, she explains, and as new information comes to light MicroPlace is quick to learn from it. “It’s not a perfect solution, but the world cannot wait for perfection.” In the words of Muhammad Yunus, the greatest challenge is to change the mindset of people. Narayanan is one individual bent on doing just that. Leading MicroPlace into an era of greater interconnectivity and awareness will take nothing less.
Continue reading on Examiner.com: Small investments, big payoffs: MicroPlace – San Jose Web 2.0 | Examiner.com http://www.examiner.com/web-2-0-in-san-jose/small-investments-big-payoffs-microplace#ixzz1GtQOYwUD
bonnie boglioli randall 