How MicroPlace Creates New Opportunities for Investors
By: eBay Inc. Staff
MicroPlace CFO talks about microfinance and how it benefits the working poor and investors alike.
When MicroPlace -- eBay Inc.’s business for microfinance, microcredit and socially responsible investing -- launched in 2007, the core message was that it provided “ways to do good that also happen to be investments.” This idea resonated with people who were already actively contributing to charity and who appreciated the ethos behind sustainability practices. Thousands of those people became investors, and have helped hundreds of thousands of people in the process: Investments made through MicroPlace have enabled more than 484,000 working poor in more than 62 countries to access capital and financial systems that help bring stability and predictability to their finances and lives.
Little known to the broader investor community is the fact that returns on investments on MicroPlace have beaten returns for most money market accounts and short-term CDs in the past few years. (MicroPlace investments are currently open only to U.S. investors.) As the CFO of MicroPlace, each year Paul Blyth takes that message and others to several conferences and business schools. Microfinance, he emphasizes, is a very promising new asset class.
Most people in the investment community make choices partly based on the evaluations that potential investments receive from Moody’s, Standard & Poor’s, Fitch, and other ratings agencies. For the most part, these agencies evaluate investments based on the potential financial return they provide compared with the potential risk of putting money into them.
But like other new asset classes (think of emerging markets 20 years ago), thus far, there is no comparable rating system for microfinance securities. And because these securities are new and unrated, investment has until now been limited to sophisticated institutional investors, funds and other organizations that have the skills and resources to do extensive research.
What MicroPlace has done is demystify microfinance for industry experts who offer investments that are open to retail investors. “MicroPlace’s challenge is not only to educate investors about this new asset class, but get them to understand they can use investments to do social good,” said Blyth. “People traditionally think investments are for earning money and donations are for doing good. The concept of earning money and doing good is a new concept that requires thoughtful education and execution.”
Turbulent markets and low interest rates have helped MicroPlace’s cause, as its investment opportunities provide a way for investors to obtain competitive returns as they use their funds to fight poverty. “Microfinance investing is all about sustainability, while charity is based on availability – how much money you have to donate,” Blyth added. “Charity is one of the first things to go when the economy goes bad.”
“We’re positioning MicroPlace as an investment that earns a return but focuses on celebrating the investor’s generosity as the human and emotional element,” Blyth said. “This takes the focus away from the philanthropy/investment contradiction and reframes the space within which the user views our value proposition.”
Stay tuned as MicroPlace launches a completely restaged site in a matter of weeks that’s more closely aligned with the PayPal brand and reflects the company’s best ideas on how to serve investors and people they want to serve. With the restaged site, the team hopes that investors – from current individual MicroPlace investors to financial advisors and their clients – will see microfinance investing as inherently focused on sustainability, using investment as a way to help alleviate poverty.
“eBay looks at sustainability by interpreting the shopping experience – reuse, recycle, and shop consciously,” said Blyth. “We look at sustainability and social commerce through the lens of investment. MicroPlace is sustainable in two ways: investments grow, and investments last.”
Paul and other MicroPlace team members will be speaking at these upcoming events:
- Investment & Innovation In Microfinance, Washington DC, Oct, 26-27, 2010
- Keynote @ Microfinance 2.0, San Francisco, Nov. 15-17 , 2010
Contact email@example.com for more information.