This Course will clarify the definition and meaning of Social Entrepreneurship and will focus on the need to learn about the source and root of a social problem. You will be introduced to different perspectives about Social Entrepreneurship and you will learn about complementary and opportunistic assets which will help you to detect an opportunity and develop an idea of how to create a business for social change. From a practical perspective you will be asked to initiate a team formation process and start to think about a problem topic that you want to address with your social venture in the future. You will work in a team to research this topic and will gradually start to think about a particular opportunity and identify a purpose for your social venture project.
Interview with the founder of MyC4 (Spring 2015)
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來自 Copenhagen Business School 的課程
Identifying Social Entrepreneurship Opportunities
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從本節課中
How to Identify an Opportunity
In Module 4 you will be introduced to opportunity identification. You will learn how to recognize complementary and antagonistic assets and turn them into opportunities. You will also be confronted with failures that other ventures experienced in order to prepare yourself for potential challenges for your own establishing your own social venture. By the end of the Module you will be encouraged to start thinking about possible income models.
與講師見面
Kai Hockerts
Centre for Corporate Social Responsibility
So now we're in Spring 2015 and quite a few things have been
happening since the last interview we gave about MyC4 and our business model.
We're here in Copenhagen and MyC4 is Nairobi.
We have had to put a time-out on the platform, so
that no new loans are uploaded.
We have to do this, because we're dealing with a bad situation in that
KEEF has kind of from going into a dialogue with
us about how they could repay the outstanding, which is quite a considerable
amount of money to the MyC4 crowd funding investors, has gone into a deadlock.
The deadlock has led to that they have actually sued us [LAUGH],
quite strange when they owe you, like a million Euro, that they sue you.
They have sued us, because they don't want us to talk about it.
They have not got any confirmation in the court on that and we have counter-
sued them for fraud and we have contacted the police about them as well.
Now if we remove from the court case and all the technicalities of that,
why we have called a time-out is because we, of course,
need the best possible time to find out how can we re-engage with KEEF.
We actually don't believe that this battle is going to be won in court.
We believe that the money is still there, KEEF is operational.
They are doing loans and they've had a bad situation which they had eroded
to an even worse situation, because they're using the cash flows of
the MYC4 investors to fund their business and that's wrong.
So as they don't want to have a dialogue about it,
we have to get them to talk with us at the table.
If we look at the time-out phase, it's obviously not a good thing.
MyC4 is built to in a way serve two different things, that the investor can
take risk with their capital and lend this capital out to an entrepreneur in Africa.
And the African entrepreneur can get this capital in a fair way and
invest in their business.
At the moment, there's a time-out.
So these entrepreneurs can't get this capital,
because there's a huge demand for that.
On the other hand, these investors can't be repaid.
So MyC4 has a time-out on new loans, but
it doesn't have a time-out on repaying the loans.
So we have at the moment four active partners in Africa, we have in Tanzania and
Uganda two partners and we have two partners in Kenya and
they are all repaying on the loans, which are outstanding to the investors.
The investors can then choose to wait and see what happens with the time-out on MYC4
or they can withdraw their funds and use them for other purposes.
The time-out in itself means that MyC4's, if you go on the site here in the spring,
you will see the active portfolio and we have Yehu and
Jubliant in the coastal area of Kenya, which are actively repaying.
In March, the biggest partner we had, Premier Kenya,
they repaid their total portfolio.
So they took a situation out of a business decision,
where the Euro had been very weak towards the shilling.
And they could have, actually, a profit by repaying their total loan
of nearly a million Euro which they did in the March month.
So when we look at the situation with KEEF,
unfortunately this is not the first time that MyC4 has been in a situation.
They're never the same.
And in 2009, which is quite some years ago,
we had a situation, where the owner of Ebony defrauded MyC4 and
actually had kind of ghost loans on the platform.
We found out, but the problem was the moment we found out,
he was closed down and the case is still in court in Kenya.
It hasn't been resolved.
And the man has disappeared and the money has disappeared.
Now when we transfer this to the situation with KEEF, we see it a bit differently.
Because on KEEF, we had a dialogue and on KEEF, it was some loan officers
who were doing fraudulent business on, and misusing the repayments of the loans.
Now that was in the summer of 2014.
What has happened since is the dialogue we have had with KEEF has gone dry.
And KEEF has started to speculate in their, maybe their own survival.
We don't know, because the dialogue has gone sour on this.
But they have started to misuse these funds, because they're still active.
So here it is an organization, which is doing something, which we think is wrong,
so we went into court and we have contacted the police about it.
But it is still active, the organization is still there.
Now, when we then look at MyC4 from a business model perspective,
we would just say that the weakest point we have in our model is the provider,
it's the microfinance institution.
And why is that the weakest point?
Our best evaluation is that they are still too small.
Comparing Premier Kenya and comparing KEEF,
they are two different kinds of microfinance institutions.
When we classify them, you will have a tier one, two, three, four and five.
And tier one would be a very mature institution with very good
governance with a portfolio of a considerable size.
Let's say, 10, 15, 20 million Euros or Dollars in their loan book.
And a tier five would be a new institution where somebody has decided, probably in their
own community to start offering the services of a microfinance institution.
MyC4 has been dealing with the middle segment of this,
where we have Premier Kenya and the upcoming segment, where we have KEEF.
Which are coming from the fifth,
the fourth stage, which are founded by a single entrepreneur.
Where the other one are professionals, which are active in the market.
And the weakness in our model is if these ones are too many and [LAUGH] are too big,
then the risk of failure is higher here.
With this situation we are faced in here in spring 2015 in MyC4,
one could ask yourself and with the time-out:
Is this the end of MyC4?
Another could ask you the question: Is this the new beginning of MyC4?
And you, listening to this, could discuss, which way do you think we should go?
Should it be the end or should it be a new beginning?
When we look from the institution from it, we just have to say one thing first.
We, in the middle are fighting a war against KEEF, where they are owing a lot
of money to about 10,000 investors from the whole world.
So our main focus is to do the best possible job we can to collect as many of
those funds and bring them back to the investors, that's our main focus.
Now it's obviously that we hope we can be successful with it,
we hope we will be able to achieve that.
When we have a situation of clarity on that,
we will sit down and we will reevaluate our business model.
Is there fraud in the model, in the value chain we have? Question.
The technology works if we should take the good part of it.
When we started MyC4, in 5, 6 years ago, we had 30 people running the platform.
Now the platform is run by less than four people.
So the technology is able to deal with thousands of investors from the whole
world, the cash flow, transferring that cash flow to Africa.
Remitting it back to the investors again, reconciling the data on this platform and
doing that all in a cloud online.
So the technology is there, that's not the imperfect part of MyC4.
It obviously lies in the value chain and the question you could be is,
is it because MyC4 is depending on the microfinance institutions and
should lend directly to the borrowers?
Is it because the institutions are too weak?
Or is it because MyC4 has not looked
at making a value chain combining everybody?
What do I mean with that?
Yes, MyC4 is still depending on that it is the West,
which is lending capital out to borrowers in South.
Should it be South - South?
Should MyC4's technology be used to, that the Kenyans are borrowing money out to other
Kenyan people?
What would change?
Like on Facebook, where people know each other, would it change if the borrower and
the lender actually were connected?
If we just wind the clock back, we started ten years ago.
It took us considerable time,
I'll say up until four years ago to build the business model.
Now when you think about what we have done and what you can see it is,
do you have some good advice for us?
It would be interesting to learn.
If we look at MyC4, then the investors' return has been
heavily reduced because of several things.
One thing is the risk and the default on the partners we're dealing with, but
also there's a technicality in this that when the money from the investors is being
lent out to an African borrower, there's a currency transaction.
So it starts with Euro and it ends with shillings in Kenya, Tanzania or Uganda and
this swap of the currencies falls, every month, costs on an annual basis about 6%.
So MyC4 has been thinking: if we could reduce that cost of 6%, the loans could be cheaper or
the investors could earn more or they could split the part of what does it.
And we have found solutions to do that,
which we started to do about a year ago in Tanzania and Uganda.
So we actually do our own cash management in those two countries.
And going forward, we thought that that would be the model to do in Kenya.
And the reason why then, we wanted to focus on one country, so that we, by dealing
with the cash ourselves could allow the investors not to change the money.
So when the repayment was coming from an entrepreneur in Kenya,
they could decide to keep the balance on the account not in Euros and
pay a cost for having the currencies, but having an open position in shillings.
This in a way, opens up further doors for Kenyan investors to use MyC4,
because then you're multi-currency on the lending, the investing side and
the borrowers could be multi-currency in that sense as well.
So when this interview started here today, we had a debate and
some of the words you can use when you do ventures and
you are an entrepreneur, is it bad if MyC4 and
we speculate now, if MyC4 fails and it doesn't get to work.
Now my point of this is I think it's a learning.
I think, of course, I would like to build something,
which is sustainable and will go on in principle forever.
It's like getting a child.
You want to pass away before your children,
not the children to pass away before you.
So it's obviously, if MyC4 doesn't exist in one year from now,
I would feel a bit of sadness in that.
But I think it's done a lot of good and
I've tried to focus on what was the learning we have done.
Today, we have funded 25 million Euros from 20,000
investors in 120 countries to 20,000 entrepreneurs and
their employees and their families in Africa.
I don't think that a bad thing, I think that's a good thing.
So the technology's there.
We believe we can white label it, we believe that the people who have worked in and
around MyC4 have learned things.
We believe that the added value,
which is coming from this venture is going to be used in other ventures and
they are going to be used in other existing businesses.
So when we discuss things from being bad and good, I think we should try and
remove that and say, there will be ventures, which don't continue forever.
There will be ventures who pass away before the parents who invented it,
that's a fact of life.
Now how we deal with it and what we do with it is something,
which I think we should learn about.
What do I mean with white label?
MyC4 is a technology,
it's actually hosted on Amazon in the cloud and it can be replicated.
So we can take a copy of MyC4 and we could call it UC and tomorrow,
somebody else could start a crowdfunding site.
So we could white label it, put C4 in a box and we could actually invest
that as a venture capital in a new company or existing companies.
It could be that some of the partners we have dealt with in Africa and
we have had contacts about this would use it as a solo funding for
their microfinance institution.
So in this way,
they have to be 100% sure of what they're putting up is the right thing as well.
The governance in it.
So we need a bigger institution than the starting institutions to do that,
but they could use our technology to crowd fund their borrowers in
a transparent and good way.
So we believe there's new business models, which will come out of the MyC4 venture.
For my side, I, sitting in this chair, I'm not a banker,
I'm not a financial educated specialist into this.
And the reason why we engaged in MyC4 with the microfinance industry was a necessity.
And the necessity was that we wanted to provide a service to a needing
business person, who had an opportunity to grow his or her business and
needed some capital and probably also some advice and assistance to do that.
And the only way we could get in contact with them was through the microfinance
institutions.
Now when I look at them and the experience we have had with them,
I actually don't think that there has changed a lot.
I think there has come a discussion about regulatory framework and
licensing, but in principle, you still have somebody who starts up, and
that's good, because we never get the next big one, if nobody starts up
the little small one tomorrow and there will be some of those who fails.
It's part of, in any industry.
If you have a lot of farmers who start up, not everybody gets a big farm.
If you have a lot of people selling beer, not everybody gets a big shop where they sell beer from.
It's the nature of business that the industry will have flaws in it.
Why we talk a lot, I think, about microfinance in my personal perspective is
that Muhammad Yunus, who set a lot of focus when he got the Nobel Prize about
microfinance, gave the impression that everybody would repay.
That there were zero defaults.
There is nothing called zero defaults.
There is always somebody who is not able to do it.
There's always some business who will fail.
That's the nature.
The nature is not that everything is perfect.
There is something, which will not work out and
there's something which will work out.
And there's something which will not work out for the long time and
there's something which will work out for a longer time.
