1. INDIRECT PERSON TO
PERSON (P2P) PLATFORMS
Tim Hassett
VP Kiva

2. Overview
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Crowd Funding has Arrived
Crowd Funding Microfinance
Indirect P2P Market
Global Impact of Indirect P2P Market
Advantages & Disadvantages with Platforms
Future of Indirect P2P Market
Questions to Consider

3. Crowd Funding has Arrived
Raising large amounts of social capital through
small sums from many people
• Network for Good has raised over $500M
• Direct P2P has raised over $500M
• Zopa
• Prosper
• Lending Club
• Indirect P2P has raised over $250M

4. Crowd Funding Microfinance
“Person to Person Lending, Is Financial
Democracy a Click Away?” USAID Sept 2008
• Direct – Borrower posts loans directly to
platform
• Indirect – Borrower is posted by a Field
Partner
• Microplace – Notes from Issuers Sold

5. Connected Capital
Photo Credit: Connecting Dotz

6. Indirect P2P Market
Platform
Kiva
MyC4
Babyloan
RangDe
MyELEN
TOTAL
Loans Funded
($000)
Q1/2011
$210,000
18,000
2,300
1,000
900
$232,200

7. Different Models
From Survey of 24 Institutions
Financial Returns for Lenders
– 20 provide no return to lenders
– MyC4 is largest platform offering returns
Regional Focus
– 11 are global (Kiva) & 13 regional (Wokai)
Specialized Loan Products
– 6 specialize in certain loan products
• Vittana for Student Loans
• Energy in Common for Green Energy Loans

8. Different Models
From Survey of 24 Platforms
Borrower Risk
Yes
No
Partner Risk
No
Babyloan
MicroWorld
Lend for Peace
Zafen
Yes
Deki
Energy in Common
Good Return
Kiva
MyC4
Vittana
Rang De (proportions of defaults covered by a
Contingency Fund)
United Prosperity
Xetic

9. Global Impact of Platforms
Provide early capital to help Field Partners scale
– Tier 2-4 MFIs
– Risk Transfer allows for product innovation that
may not be possible with commercial capital
Stimulate product innovation
– Risk Tolerant and Low Cost Capital
– Vittana and Energy In Common
Education Vehicle for Lenders
– Connection
Caring
Engagement

10. Advantages & Disadvantages
Advantages
• Attractive Source of Funding
– Low cost
– Risk Transfer
• Public Relations and ability
to share best practices
• Ability to innovate when
borrower risk is transferred
to lenders
Disadvantages
• Foreign Currency Loans
– 9 of 24 Platforms lend in
foreign currency
• Higher Operating Costs
• Challenges to Borrower
Privacy
• Liquidity Concerns
– Many Platforms require
monthly repayments

11. Future Evolution of Sector
Larger SME Loans
– Able to finance the “missing middle”
Insurance Products
– Risk Transfer already entails credit insurance
– Crop or Business Interruption Insurance could be
appealing to lenders
Individual Development Accounts
– Lenders could match savings after pre-determined
criteria were achieved

12. Questions
• How large will this market sector grow in the
future?
• Does differentiation among platforms add
benefit for MFIs or does it create confusion?
• Should there be an accreditation of Indirect
P2P Platforms?
– Protecting Lenders
– Providing information to Field Partners