MicroVest is a funding organization the specializes in micro loans to startup businesses on a global scale. Since 2003 the company has largely operated in this area, but recently has argued that micro lending is now expanding into the small business industry. “Microfinance—the business of investing in financial institutions that make loans to low-income entrepreneurs in developing countries—is a form of investing for social good.” According to Barrons, micro financing has grown to represent almost 10% of “assets held by impact investors surveyed by the Global Impact Investing Network, or GIIN.”
The transition into the small business sector has occurred thanks to the successes of micro investing. As Ron Cordes, former co-founder and executive co-chairman of AssetMark puts it, “What happens when the woman borrower who started with a $200 loan has built her business and has 10 employees and now needs $5,000 in capital to buy equipment and machinery?” Currently not much, but the growing industry is now seeing more players enter the market which is good news for global small businesses.
While not directly supporting these small businesses, companies like MicroVest are looking to support organizations like the Indian School Finance Co., or ISFC. The ISFC “is a 10-year-old non-banking finance company providing financing to affordable private schools, small institutions that often fill a crucial education gap in India. ISFC helps finance new classrooms, labs, and restroom facilities, and has reached more than three million students, 20% of whom are in rural areas.”
MicroVest invests in these type of organizations to support small businesses looking to grow. Currently about 47% of MicroVests #381 million in assets are connected with institutions like ISFC “or others that lend to small businesses, while 48% are invested in companies involved in classic microfinance, according to the firm’s annual report.”
While it can be expensive to join operations like MicroVest ($250,000 to connect invest with the organization), many argue that the opportunity is a great starting point for people looking to get involved with investing.