Big name VC gets into microfinancing

Big name VC gets into microfinancing 04/12/2004 04:56 AM

Amazing NYT piece on Vinod Khosla, a partner at Kleiner Perkins and co-founder of Sun Microsystems, who is now devoting part of his time to trekking rural India, making micro-loans to entrepreneurs starting home-based businesses.

"I was completely blown as I listened to the stories of these tenacious women," Mr. Khosla said. "I started crying." In his view, the microfinance initiatives he visited in India and Bangladesh in February ran more efficiently than most Silicon Valley organizations. "They have sophisticated credit algorithms," he said. "Does the woman own a buffalo? Some chickens? Does she have a toilet in her home? What kind of roofing material does her home have? Does she bring a shawl to the village meeting?"

In India, microloans are usually disbursed to poor women whose total family assets are less than 20,000 rupees ($459) and whose monthly income is smaller than 350 rupees. Yet microfinance initiatives have a phenomenal repayment rate averaging more than 95 percent, better than the best commercial banks in the world. Many of the programs are highly profitable, Mr. Khosla said, adding that "microfinance is one of the most important economic phenomena in the world in the last 50 years."

This is a GrokNews Entry: (what is grok?)

Also check out: