MicroPlace

MicroPlace, founded in 2006, is a broker-dealer registered with the SEC and a member of FINRA (formerly NASD), MicroPlace is currently the only broker-dealer specializing in microfinance securities for retail investors. Started by Tracey Pettengill Turner, MicroPlace was bought by eBay Inc. in 2006.

MicroPlace was founded when Tracey realized that the microfinance industry needs $250 billion to get capital to all the world's working poor who need it . However, only $25B of capital has been raised in the international markets to date. While American people are very generous and give about $300B in charity every year, this goes to all charities and not just microfinance. Turner felt that there were not enough charitable dollars to address the global poverty issue and so founded MicroPlace to direct socially responsible investment capital to microfinance investments. Americans invest about $2.4T in socially responsible investments in 2006 Socially responsible investing is not only a sustainable means to address the capital needs, but it is the only scaleable solution.

MicroPlace provides everyday investors with the ability to make investments in the microfinance industry that have the potential to earn interest. Until MicroPlace was founded, ordinary investors could not really invest in microfinance unless they had significant capital and could work with a microfinance security issuer directly or were willing to invest for no financial return.

Microfinance has proven to be a highly effective poverty reduction tool in developing countries and in more industrialized countries. (See here for an example of a US MicroPlace partner and their results in the US). Microfinance can be more effective than charity as it provides a “hand-up” instead of a “hand-out” and lets people work their way out of poverty with dignity. Although repayment rates average higher than 97%, fewer than 10 million of the 100M people receiving microfinance are able to obtain loans from traditional banks. Microfinance is targeting these unbanked people and wants to bring them mainstream financial services. Access to financial services is a critical poverty alleviation driver.

History

MicroPlace was founded by Tracey Pettengill Turner and was bought by eBay for an undisclosed amount in 2006. eBay purchased MicroPlace as eBay is interested in the power of ordinary individuals to level the playing field. Powered by eBay’s expertise in connecting people and creating marketplaces, as well as PayPal’s expertise in processing payments, MicroPlace offers a way to invest that gives a financial return and makes a positive impact on the world. MicroPlace levels uneven global playing field by bringing the power, transparency, and efficiency of the markets to microfinance by giving access to investments to the ordinary investor.

Sample Investments

Investors can choose investments in 29 different countries on the MicroPlace website. Investors can search by financial return offered, length of loan offered, geographical area, or social indicators such as whether or not the loan focuses on women, rural areas, of extreme poverty. Some example loans are:

Adhikar is a microfinance institution in India. A $500 investment in this fund will enable loans to 8 people. As of July 2008, Adhikar had about 40,000 borrowers with a 100% repayment rate. Adhikar focuses on loans to women. As Bono said : "Give a man a fish, he'll eat for a day. Give a women microcredit, she, her husband, her children and her extended family will eat for a lifetime." This is because when women have access to economic opportunities, the whole economy tends to advance because women tend to spend their profits on educating their children and feeding their families. If that's not enough of a reason to invest in women, they're also a better credit risk. And, as women in developing countries tend to be one of the most vulnerable and marginalized portions of society, there is also a social justice rationale for these investments.

Hadiani, a housewife in a "Snake Charmer" family is one of Adhikar's borrowers. She used to help her mother-in-law in selling herbal medicines and cosmetics to rural women moving village to village and had no income of her own. Her husband was a snake charmer (the practice of hypnotizing a snake by playing an instrument) and his income had fallen drastically over the years due to a government ban on snake charmers. She wanted to do something to help her husband and family and accordingly started a small betel shop in the village in 1999 using the small savings of her husband. She earned about 20 -30 Rupees per day then.

After a few years, she learned about Adhikar and acquired her first loan of 1000 Rupees in the year 2005 out of which she bought stocks for her betel shop and a few grocery items. She aquired the second loan of 3000 Rupees and expanded her stock. She continued to invest in stock and on October 06, 2007, she aquired her 3rd loan of 8000 Rupees, which by now had become a betel and grocery shop. Her sales per day are now around 400 to 600 Rupees and she earns a daily profit of about 50 to 100 Rupees.

With the profits, Hadiani has been able to send her children to school, arrange private tutors as well as increase the quality of meals for them. She has also been able to purchase better clothes for the family and has even remodeled her living room. Her quality of life has improved dramatically.

"Gradually my dreams are coming true because of Adhikar."

AE&I is a microfinance firm in Cote d'Ivoire. a $300 loan will enable a loan to one person. As of July, 2008, AE&I had 4,987 borrowers with an average repayment rate of 99%. Amoin is one of their borrowers. At the age of 12, Amoin’s parents were no longer able to pay for her schooling. That’s when she went to work selling fruit and beans in the local market. Today, she is 29, with her own children and a lot of experience trading in the market. With a loan from AE&I, she now grows and sells her own palm beans in Adobo’s open market. Her life’s goal is to give her two children the university education that she herself was denied. Her oldest daughter entered school this year, with all expenses covered by the income from Amoin’s business.

Habitat for Humanity is working in 90 countries in the world to work with low-income people to build and own houses. Habitat for Humanity has a long history of helping people make their dream of a home come true. Founded in 1976, they have built more than 250,000 houses around the world, providing more than 1 million people in more than 3,000 communities with safe, decent, affordable shelter. Habitat houses cost as little as $800 in some developing countries to an average of nearly $60,000 in the United States. Homeowners working with Habitat not only invest a down payment and the monthly mortgage payments, but also hundreds of hours of their own labor — sweat equity — into building their Habitat house and the houses of others.

The Vilches family worked with Habitat to obtain a house in Porongo , Bolivia. Loraen Vilches and his wife Loli built their Habitat house in Porongo, Bolivia, three years ago and have raised their three young sons there: 10-year-old Jonathan, 4-year-old Wilbur and 3-year-old Paulo. Before the Habitat house, the Vilches family lived in one bedroom of Loli’s mother house in Porongo.