Frequently Asked Questions

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1. What makes MicroVest unique?

2. Can I invest with MicroVest?

3. Why focus on profitability?

4. Are there social objectives to MicroVest's investment strategy?

5. Why now?

6. I am a student, how can I collaborate with MicroVest?

7. What is the future of MicroVest? Of microfinance?

8. What is a microentrepreneur?

9. What roles do microfinance institutions play in the economy?

10. What impact does a $100,00 investment in microfinance have?

11. Where can I go to learn more about microfinance?

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1. What makes MicroVest unique?

MicroVest's commercial investing approach to financing MFIs makes us truly unique from other firms and aid agencies. We seek to provide the needed capital to MFIs with proven results and management techniques to expand the number of poor people receiving credit while generating above average returns for our investors. By selectively investing in the most profitable firms, MicroVest creates a competitive system among MFIs that reduces market inefficiencies. In effect, MicroVest is creating a new capital market that offers MFI debt and equity to accredited and institutional investors.

Even more importantly, MicroVest is committed to adhering to the highest standards of laws, rules, and ethics. We realize that our continued success depends on unwavering adherence to these standards.

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2. Can I invest with MicroVest?

MicroVest offers investment opportunities for accredited investors only.  Please refer to the mPower and OneWorld programs sponsored by Calvert SIF and MEDA for retail investment opportunities.  General information about the fund is available on the website. For more information please contact info@microvestfund.com.  You may also wish to consider a directed charitable contribution to any one of our three sponsors CARE, MEDA and SCDF, specifying MicroVest as the recipient.

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3. Why focus on profitability?

In recent years, microfinance institutions (MFIs) have faced a choice: to remain dependent on aid from charitable organizations to sustain themselves or to embark on a new path known as "sustainable microfinance." The latter option holds microfinance institutions to the same standards of profitability as their clients. The distinguishing characteristic of microfinance institutions from charitable organizations is that its capital is recycled - one client's repayment becomes another client's loan allowing the same capital to further economic development multiple times. By focusing on profitability, MicroVest pushes MFIs to retain this cycle. A profit-oriented approach helps to ensure greater client success and repayment rates by encouraging MFIs to develop new business training and support networks for their clients. The profitability of the institution depends on the profitability of its clients. MicroVest envisions a future where MFIs are considered an integral part of a country's economy and investment in MFIs is sought after. Profit-orientation is the key to this vision.

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4. Are there social objectives to MicroVest's investment strategy?

Absolutely. MicroVest's mission is to improve the lives of the poor by assisting self-sufficiency through its goal of raising capital and investing in efficient, well-managed MFIs, thereby supporting and enhancing their investments in microentrepreneurs. We anticipate that the MFIs we invest in will encourage participation by women, minorities, and economically disadvantaged populations. We believe that by financing the most competitive MFIs, we ensure that MFIs are held to the highest standards of integrity and that microentrepreneurs receive the best support available. Our commercial strategy helps fulfill our social objectives. MicroVest makes every reasonable effort to prevent environmental irresponsibility by MFIs and their clients.

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5. Why now?

Microfinance institutions have begun reaching the boundaries of governmental and aid agency support. Growing gaps in capital are preventing MFIs from realizing their full potential. MicroVest has found that competitive, well-managed MFIs are both willing and able to pay premiums in order to receive steady funding from the commercial sector. This funding enables them to reach a greater number of microentrepreneurs making the venture profitable for both investors and the MFIs.

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6. I am a student, how can I collaborate with MicroVest?

MicroVest will evaluate project proposals on a case-by-case basis. The primary criteria for acceptance are contingent on the project having a direct, immediate, and positive effect on MicroVest's operations. Please direct your proposal to info@microvestfund.com. If you would like to be an intern at MicroVest, please see the employment section for application information.

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7. What is the future of MicroVest? Of microfinance?

MicroVest launched its first fund on January 1, 2004 and will develop other investment vehicles. MicroVest has an exciting future ahead of it, with microfinance institutions reporting consistently astonishing growth rates. By providing capital to these institutions and their clients, MicroVest is taking commercial capital into the fight against poverty.

• The World Bank estimates that MFI portfolios are at least $10-$15 billion
• Growth in overall MFI portfolios is somewhere around 5-10%
• Growth in the most profitable MFI portfolios is between 20-30%
• This translates into at least $1 billion in new funding needs every year
• To date, after 20 years of investment in the field, net foreign capital investment in MF is only $1.3 billion

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8. What is a microentrepreneur?

The majority of the world's people earn their living as family farmers, artisans and tradespeople. In fact, there are over 500 million people that support their families through small-scale projects in commerce, agriculture, manufacturing and services. This is known as the informal economic sector. In urban areas, sometimes as many as 50 percent of working people are engaged in these types of activities and in rural settings, the percentage may be even higher.

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9. What roles do microfinance institutions play in the economy?

Despite its importance in the world's economy, the microenterprise sector has been ignored by most commercial banks. To start a business, microentrepreneurs have been forced to borrow at exorbitant rates from loan sharks or to rely on family members. Microfinance institutions seek to bridge this capital gap by permitting smaller loan sizes, usually between US$ 100-2,000, than commercial banks typically allow. These institutions provide responsive financial services to low-income entrepreneurs in a profitable manner, at rates that cover the costs of making very small loans.

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10. What impact does a $100,000 investment in microfinance have?

• 6,000 loans of $500 per year with leverage, or
• $300,000 lent per year with leverage, or
• $3,000,000 over ten years
  • 15,000 microentrepreneurs helped over 10 years,
  • 75,000 microentrepreneurs and their families benefited.
• Primary school per student annually: $10 in Afghanistan (AED)
• Year supply insecticide and mosquito net: $2 in Africa (WHO)
• Cost of building a house in developing countries: $200 (Habitat for Humanity)

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11. Where can I go to learn more about microfinance?

The websites of our founding partners, CARE, MEDA and SCDF, can provide you with additional information about microfinance and microfinance institutions. Our links section also includes the websites of some helpful organizations such as CGAP (Consultative Group to Assist the Poorest) and MIX (Microfinance Information eXchange).

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