Union Square Ventures hosted Matt Flannery of Kiva.org two nights ago. Kiva is a website that enables anyone online to engage in microfinancing of individuals in third-world countries.

Microfinance is obviously a hot topic in the wake of Dr. Yunus winning the Nobel Peace Prize for work on microfinance. It was a fruitful and entertaining night. I learned a ton about Microfinance Institutions (MFIs) and the infrastructure that needs to be built in order to support Microfinance in rural communities.

A few interesting gems from the night:

• There are approximately 10,000 MFIs, but Kiva can only work with MFIs that have internet access, which reduces the number of MFIs that Kiva can do business with to 300. In other words, this is still a significant digital divide.
• Kiva actually had interest rates on the site for awhile, so you could actually make money with Kiva… but they had to remove interest rates due to legal issues.
• The motivations behind someone investing in a person via Kiva are incredibly diverse. Some people use Kiva in the same way they use a charity, even though it is technically a loan. Others use Kiva because it is NOT charity, and it forces people to pull themselves up on their own without giving anything away. Others do it for novelty/entertainment value. Some people could be pessemisticly described as interested in creating a portfolio of people they own a stake in… driven by voyeurism. There are many other reasons too, and I find it really interesting that there can be so many diverse/conflicting motivations for the same action.

We at Union Square Ventures had no prior connection to Matt Flannery, but Art Chang of Tipping Point Partners had a connection to Kiva’s President and offered to organize the event. Thanks to Art for making this happen!