LinkedIn's Reid Hoffman Lets 40,000 People Borrow His Fortune
Didn't get in on the LinkedInIPO last year? Here's another way to get your hands on the proceeds: Sign up for Kiva, a Web site that lets people make direct loans to entrepreneurs in poor countries, and LinkedIn founder Reid Hoffman will give you a $25 credit to use on the site.
Hoffman recently loaned Kiva $1 million and invited 40,000 people to each lend out $25 of his money to a borrower of their choice, using the Kiva platform, at no cost. Since the program went live on March 12, 35,000 people have signed up, loaning out more $875,000 to store owners in Kenya, farmers in Peru and scores of other impoverished entrepreneurs in more than 50 countries. (It's not too late: Click here to sign up for one of the remaining $25 credits.)
This is the first time Kiva has given its users the ability to lend out an individual's personal wealth. Already, the site has seen a monthly record 43,000 new users sign up for the service in March.
Some of those new users have lent their own money out on top of the $25 of Hoffman's money, totaling roughly $110,000 so far. The add-on funds suggest that the program is having a larger effect than if Hoffman had just handed over the $1 million to Kiva and relied on the site to dole out the loans, rather than enlisting thousands of new Kiva users to do so. (There's past evidence the concept works: A previous program that Kiva ran in August, which offered new users lending credits, turned 14 percent of those new users into regular lenders who ended up lending out their own money through the site.)
Kiva has seen a 98.9 percent repayment rate on the roughly $295 million of loans it has facilitated since the site launched in 2005. So chances are Hoffman will get back around $989,000, at which point he'll have the option to re-lend the money, donate it to Kiva or withdraw the funds entirely. The same rules apply to all Kiva lenders.
Hoffman, who sits on Kiva's board, told TechCrunch that the idea behind the program is to take funding techniques he's seen work in the private sector and apply them to the non-profit world. “The best ideas and the most successful ventures depend upon that initial spark from angel investors,” Hoffman said in an email to HuffPost. “Thousands of people are joining in this effort as angel lenders to ensure that the spirit and promise of entrepreneurship can be realized in even the most remote villages.”
Premal Shah, Kiva's founder, said in an email that "other generous supporters are following in Reid’s footsteps.”
Since the Hoffman program went live, Kiva has seen a 544 percent increase in Facebook "shares" over the previous month, the company said.
As New York Times columnist David Carr noted recently, those "shares" are digital activism that generate social currency for the people doing the sharing at no cost to them. A difference, however, between regular Facebook "likes" and Twitter hashtags, is the Kiva-inspired shares actually represent real currency.