A guest blog post by Alan Jones. More below.


Think it takes millions of dollars, an MBA and a few board seats to become a VC? You’d be wrong to think so. I’ll tell you why, but first, answer this question: what is a startup?

We’d probably agree that startups are lean, cash-poor, energy-rich adventures, that startup founders are mavericks, dreamers and misfits, driven by the belief that there must be A Better Way. But do startups have to involve new technology or new business models? Do they have to be built on the hope of massive profits at some future date? Can we scale the whole model down and still be talking startups?

I bet the husband and wife who decide to leave their corporate careers to start the bed-and-breakfast they’ve dreamed about feel like they’re on a lean, cash-poor adventure, doing something they’ve never done before. In my book they’re startup entrepreneurs just as much as, say, the pair of software engineers with a new web platform.

The sums invested might be smaller but the financial risk is likely to be huge. The business plan will seem just as unfamiliar and full of holes. And they’re doing it because they have a passion for something. They feel like misfits, renegades and dreamers.

So it doesn’t take the promise of $50 million to make it a startup, and it doesn’t require some new gizmo. We’ve proven a B&B can be a startup. Can we scale it down further?

Sure we can; just look for people who want to find A Better Way, misfits backing themselves on the strength of a business plan they haven’t quite finished yet.

You’ll find startup people like these on Kiva.org, a not-for-profit online venture that acts as a broker of micro-loans to people like the new B&B owners, like the bright young tech startup CEOs too, but these are startups on a vastly smaller scale, and they aren’t in Sydney or San Francisco, they’re in Senegal or San Salvador.

Kiva encourages hundreds of micro-lending funds in developing countries to apply to join its field partner program, then raises funds for lending out to field partners’ clients. The money itself comes not from big pension funds and multi-national banks, but from tens of thousands of regular folks like you and me.

A typical Kiva loan might be to a Samoan woman wishing to borrow money to buy tools for a vegetable farm, or for a man in Kazakhstan to fund repairs to his taxi. Most loans are less than $500 — these are likely the smallest startups you’ll ever see.

You can get started lending to these startup entrepreneurs using your credit card to transfer money online to Kiva, via PayPal. You can start with as little as $25.

Lenders like me find the people and loans we want to support by browsing a directory of borrowers, searching or browsing by location, sex and purpose of loan. You can see names, faces and read about their family and life to help you make a decision. It can be an emotional experience, but not because they’re begging for money; far from it, these are proud resourceful people determined to get ahead, who only need the smallest boost to get started. (Note: Kiva never discloses any information about you to the borrower).

It’s up to every Kiva lender to decide how much of any one loan they cover but most loans are usually covered by 50-100 people all lending $25-30 each.

Once a loan has received sufficient lenders, the capital is paid out from trust accounts held by Kiva to the local micro-lending field partner, which administers the loan and monitors the borrower’s progress on paying back the loan, so you’ll receive periodic updates from the local ‘lending manager’ by email, often with a photo of the borrower.

The qualification criteria are very strict, to protect borrower and lender alike, since a reputation for shady deals would sink the venture as fast as news travels over social media. I’ve made nearly a hundred micro-loans through Kiva and haven’t had a single dollar go unpaid (at the time of writing, Kiva said 98.91% of all loans were repaid in full).

The best bit of all is that when a loan is repaid, your contribution to that loan is returned to your Kiva account. You can choose to withdraw it and pat yourself on the back, donate some to Kiva to help with operating expenses, or best of all: match up another micro-borrower and fund another new entrepreneur. Over a year or two, your $25 can help kick off a startup business again and again and again.

As someone who advises, invests in and sometimes co-founds startups, I often think about the reasons why people decide to get into startups, and also why people decide to invest in startups.

On the investment side, there’s no doubt the promise of a high risk/high return attracts many Investors for the MBA version of betting on horses — it can be very lucrative.

But there’s another kind of investor too — the kind who find themselves in the fortunate position of being able to contribute to someone else’s success, to the satisfaction of seeing capitalism create recurring value from hard work and good ideas like nature makes a tree out of CO2, sunlight and water. It’s good for the soul. It’s just the right thing to do.

You don’t need to be a captain of industry to be this kind of venture capitalist. With $25 on your credit card and ten minutes of your time once every couple of months, you can experience the same emotional and spiritual rewards a VC feels when a business takes off.

Like me, you might want to set aside the price of a coffee once a week and every month, tip that into your Kiva account. You’ll hardly miss the money but your hundred bucks will make a huge difference to many lives around the world, and unlike donating to a big charity, you can choose who gets your money and you get your money back if you wish!

Check out the Team Pollenizer page on Kiva, where me and other current and former members of the Pollenizer hive do our micro-startup-lending. You can join our team, Stuff You Should Know team, the Stephen Colbert team, or just go it alone.

So go ahead, help someone create some recurring value out of good ideas and hard work. I can’t guarantee you an interview with Techcrunch any time soon, but doing your venture capital investing through Kiva will create a lot of good news for a lot more people.

(Yes, THE Alan Jones, and by that I mean the all round good guy, geek, dad, environmentally caring and of course blogger.) I’ve been a Kiva supporter for 5 years since my friend Mike Khavul who I did some volunteer work with in Tanzania (and some seriously good 5 on 5 at the Mission basketball courts) introduced me – Thanks Mike!)