The idea behind microfinance is to develop financial services for low-income individuals who don't have access to traditional banks. Often that means giving small loans to entrepreneurs and small businesses that don't even have bank accounts. Founded in 2011, InVenture has developed a novel way to determine a person's creditworthiness using their cell phone. The company has an Android app called Mkopo Rahisi (Swahili for "wall of love") targeting individuals in East Africa who don't have formal financial identities and can't get traditional loans.
Potential borrowers download the app, which sifts through 10,000 different indicators—including average call length, transaction data and social network details—to gauge their ability to repay a loan and qualify them for short-term loans. The whole process happens in under a minute. Later this year, InVenture will expand to other regions, including Asia and Latin America. To date, InVenture has paid out 30,000 loans, the majority between $20 and $100, with an average repayment rate of between 85 and 90 percent.
The start-up has raised more than $3 million in seed funding from Google Ventures, Lowercase Capital, Mesa Ventures and Collaborative Fund.