Investor Profile:
Herb Buller
Businessman

In the library of Herb Buller's home is a small pair of blue children's shoes. They don't fit the feet of any member of the Buller family. Those blue shoes were made by a microentrepreneur after he received a loan allowing him to start his business. They serve as a potent a reminder of all the benefits a small loan can produce.

"My wife and I made a contribution to a microenterprise program in Latin America," recalls Buller, a Canadian businessman and MicroVest One investor. "And about a year later, we received these shoes, which were made as a result. A man had used the money to build his small business." It was a concrete example of what microfinance can do.

Over the years, from Latin America to Africa, Buller has witnessed similar successes in the microfinance projects he supports. He sees microfinance projects as a strong development tool, which helps families lift themselves out of poverty.

"As we became more involved in ways to help the poor, lending projects for the poor really resonated with my wife and myself," he says.

In The Beginning

The foundation of the microfinance movement is simple: Credit, including access to credit, is an essential building block of a strong and vibrant economy. Just like in the industrialized world, people in the developing world need access to financial services. Unfortunately, these services are severely limited among the world's poor, or worse, can take the form of unscrupulous money lenders. These unregulated loan sharks can charge their clients interest rates as high as 300%.

As the concept of microfinance has evolved over the past three decades, new revised credit programs focused on making small loans to women's groups to help them build small enterprises. With training in literacy and basic accounting, the programs held clients more accountable for their loans and enjoyed more success.

"We especially like that most microfinance institutions today provide training along with the loans," says Buller.

Building on these achievements and refining the process over time, microfinance has demonstrated that poor people are worthwhile credit risks. In fact, in some cases microfinance loan repayment rates exceed those in formal financial institutions. And despite conventional wisdom, microfinance institutions (MFIs) are able to make a profit lending small amounts to the poor even with high overhead, due to a strong understanding of their clientele. The businesses they support are more productive and profitable, resulting in a positive flow of increased income rippling through the community.

Buller advocates a judicious approach to investing or donating funds to projects. "We learned this ourselves, from talking to a lot of people," notes Buller. "When money is just poured into a project, it doesn't seem to have the same impact."

And that's where MicroVest One comes in. Launched in January 2004, this $15 million fund was created as an global intermediary to mobilize capital for microfinance "banks."

MicroVest One has placed several key investments in these micro-banks and already received payments on initial loans. What's more, a double bottom line of financial and social returns for investors is emerging. Consider the hammock-maker in Nicaragua who used a loan from a MicroVest-supported MFI to meet the production demands of a huge order - providing work for 42 families and growing his business in the process. Or consider the preservation of age-old traditions when a Peruvian weaver is able to access the credit he needs to more competitively market his handmade products against cheaper synthetics.

For investors like Buller, the financial returns are attractive but not the main reason for his support. "I learned about giving back from my parents and my church," says Buller. "Supporting microfinance institutions just seems like a really good way of giving back and the money can be used over again and again."