Tag Archives: IIT

Just do it

7 Nov

Continued from United Prosperity – The birth of an idea.


At the IIT conference which I attended, I got an opportunity to bounce the idea with several people. As with most IIT conferences, the enthusiasm was infectious and that got me even more excited. I quickly wanted to start validating the idea.


I did not know anyone directly working in microfinance and started looking up my contacts. Meanwhile I explained the idea to Michael Laycock, a colleague of mine at PMI.   Michael was a Subject Matter Expert at PMI and we had worked together on a couple of large projects. His knowledge of finance was immense and he was an expert in operations, accounting and business processes with a keen grasp of technology.


‘This is a workable idea’, he said. ‘This is about socially responsible investing, which is rapidly growing. Basically this is about people in the developed world stepping up to their plate and taking some more responsibility.  I don’t mind putting some money to help poor but hard working folks in the developing world and I am sure there would be others interested in doing the same thing’. And then very graciously he told me ‘I will help you with this idea if you ever decide to pursue this’. He then went on to explain in intricate detail of how I could apply for a brokerage license to do this or even better partner with a brokerage or bank to make this happen.


I also found out that Prof. Srinivasan, who taught me at management school, was deeply involved in Microfinance. Prof. Srinivasan, had joined IIM Bangalore where I studied, from Institute of Rural Management Anand(IRMA) and already had several areas of experience working with co-operatives and the rural sector in general. I wrote to him about the idea seeking his inputs and validation. His thoughts were that guarantees for microfinance institutions are relatively low risk, but there was always going to be political risk. He mentioned the case of how microfinance lending had halted for several months in the state of Andhra Pradesh in India. I set up time to talk to him and I had prepared nearly two dozen questions for him.


He answered each of the questions patiently and also gave me a detailed overview of the scenario in India. Most of my concerns were also addressed to a reasonable degree.


I had run out of specific questions and also accumulated simply too much information in my head. I finally asked him, ‘What would be your advice?’


‘Just do it’ he replied.


I let all the advice sink in over the next couple of days. I was already thinking how I would go about executing this.


More later, and thanks for stopping by.

United Prosperity – The birth of an idea

6 Nov

Let me introduce myself and share with you the story of the birth of United Prosperity. My name is Bhalchander Vishwanath, ‘Bala’ to folks who know me. I came to the US from India 8 years back almost to this day. I worked with MphasiS and subsequently Infosys, building large software systems for financial institutions.


On the side, I kept coming up with startup ideas and would spend several months researching them – an innovation and idea management system, a website for comparison shopping of elective medical procedures and many more. I would typically spend 3 to 4 months researching each idea and then evaluate whether I should seriously pursue it further.


In 2006, I was working as a consultant with PMI, a Mortgage Insurance Company.  Borrowers who have poor credit scores and cannot put the 20% down payment towards a home  cannot get a mortgage. However, if the borrower or the bank buys mortgage insurance from PMI, the bank will make a loan to the borrower and the borrower can enjoy home ownership. Over the years, Mortgage Insurance or Guarantee as it is called has significantly expanded home ownership in the US.


My idea was simple, if guarantees could help people buy homes, why cannot guarantees help poor people get small loans from banks? I had heard a little bit about microfinance and I felt these guarantees could also expand the reach of microfinance. I started reading literature on microfinance and would spend endless hours reading articles and papers I could find on the internet.


Sometime in 2006, it was also announced that Prof. Mohammad Yunus, the pioneer of microfinance, had won the Nobel prize and that increased excitement in the field. But I soon realized that I had hit upon a massive roadblock – An organization which plans to offer guarantees needs to have adequate capital. How do I raise the several million dollars to set up a guarantee fund? I was a little disappointed that I had hit this seemingly un-surmountable road block and decided to move on to finding the next idea.


The next few months I spent time conceptualizing a website which would measure one’s carbon footprint.  It would be integrated with a recommendation engine which will then suggest upgrades to household appliances, changes in lifestyle etc. By then http://green.yahoo.com was launched. It had similar features though a little more basic than what I had envisaged. There was also another well-funded project on similar lines being done by UC Berkeley. Given these, I was not sure if my idea could compete against these well funded ventures.


I came back to the earlier microfinance guarantee idea – it simply would not go away. I continued to read more on guarantees and microfinance and figure out how I could raise funds for the guarantee fund. Sometime in April of 2007, I came across Prosper.com and a few days later Zopa and Kiva. Peer to peer lending fascinated me. Instinctively I realized that this held a clue to solving my problem, but I did not know how. By then I also became familiar with the guarantees offered by Grameen foundation and Accion. I also learned that the smaller Microfinance institutions (MFIs) were not having adequate access to capital and no organization was offering guarantees to smaller MFIs. This was a problem waiting to be solved.


But after all this research by June 2007, I was beginning to get a bit impatient. I had no business idea. I responded by setting myself a deadline – I would come up with an idea by July 3, 2007. There was an IIT alumni conference in the valley the following week, and in one of the tracks, VCs would hear and fund idea pitches. I hoped to have an idea by then. The next few weeks I kept thinking on how the peer to peer model could come together with the guarantee model. And finally on July 2nd or 3rd, the whole thing came together: The general public will guarantee loans to entrepreneurs on a website. The guarantee will allow the MFI to borrow from local banks and make loans to the entrepreneurs.


The idea made sense to me, but another reality dawned on me. Just taking an idea to a VC will not secure funding. I decided to first get the idea validated. More on that tomorrow.


Thanks for reading.