Inside Kiva

Beginnings

Matt and Jessica Flannery had only been married a few months when Jessica took a 3-month trip to East Africa to conduct impact evaluation surveys for Village Enterprise Fund. Jessica had heard Dr. Muhammad Yunus - founder of Grameen Bank and winner of the Nobel Peace Prize for his efforts to eradicate poverty - speak at Stanford University and felt compelled to pursue a career in microfinance. Meanwhile Matt, a Tivo engineer, was thinking of a new business idea every day in his quest to become a Silicon Valley entrepreneur.

For three months Jessica visited with entrepreneurs who had used small grants of $100 - $150 from Village Enterprise Fund to start a small business. Matt joined her for two weeks to film some of the interviews, and they heard time and time again of people who - with the help of those tiny loans from Village Enterprise Fund - had grown their businesses and gotten to a place where they could afford a better life. They heard stories of people who were able to sleep on mattresses instead of dirt floors, afford to take sugar in their tea daily and buy fresh fish for their families a few times every week. Rather than meeting the poor and helpless, they found themselves meeting successful entrepreneurs who had generated enough profits from their small businesses to create a real impact on their standard of living.

Over their three months came three realizations:

• We are more connected to the developing world than we realize. Even when he was in San Francisco and she in rural Africa seemingly worlds away, Matt could reach Jessica on her cell phone as though she were one block away. Distance means little in the world of communication today.


• The poor are very entrepreneurial. While the profit margins may be very different, the spirit of entrepreneurship is as strong among the poor of the developing world as it is in Silicon Valley.


• Stories connect people in a powerful way. As they listened to story after story of a fishmonger who needed enough money to buy directly from the fishermen at the lake, or a farmer who needed to buy a better breed of cow to produce more milk, Matt and Jessica knew that any of their friends back home would want to support these business ventures if they also heard their stories. With each story came a human connection as similarities were identified, making an African entrepreneur someone easier to relate to despite differences in language, culture or levels of wealth.

After witnessing the power of microfinance in improving the lives of the poor, they returned with one question in mind: "How can we lend to a rural African entrepreneur?"

It was easy to identify that there was no way to make a microloan to a specific entrepreneur in the developing world. It wasn't easy to figure out how to make it possible.

Thus began a year of phonecalls and meetings with microfinance experts, lawyers, economists, Internet experts, and anyone else who would listen to their idea of "sponsoring a business". After much questioning and a lot of skepticism they finally decided to just begin.

In March 2005, through a local contact in Uganda, 7 loans were posted on Kiva for a total of $3,500. They included a goat herder, a fish monger, a cattle farmer and a restauranteur. Six months later every loan had been repaid. These original 7 entrepreneurs became known as the "Dream Team" and proved it was possible to lend to the poor over the Internet.

In October 2005 Kiva announced to the world the first peer-to-peer microlending website via a press release. Shortly after the Daily Kos discovered Kiva and broadcast the website to hundreds of thousands of its readers. The word was out... and the rest is history.

Since its birth Kiva has grown from a small personal project to one of the world's largest microfinance facilitators, connecting entrepreneurs with millions of dollars in loans from tens of thousands of lenders around the world.