Growing A Social Startup – Interview With Milaap, Asia’s Fastest Growing Lending Website

Milaap is not your regular charity, in fact they are not even a charity, Milaap is a for-profit venture that’s in the business of helping India’s poor. They don’t accept donations, nor do they provide things for free. Their idea of helping is by making cheap loans available to those who need them. Loans that the poor could use to buy essential stuff that would enhance their quality of life like constructing a toilet, buying a low smoke cookstove or to invest in themselves through education.

Providing low interest loans to the poor is not a new concept, it was first introduced by Grameen Bank in Bangladesh and subsequently popularized by Kiva in the West when they started an online platform for individuals to loan directly to the poor. Milaap is similar to Kiva – they offer a web based platform where individuals from any part of the world could directly loan to the poor, however unlike Kiva which makes loans across 70+ different countries, Milaap is exclusively focused on India.

On Milaap’s website you’ll find borrowers profiles clearly stating what they need the loan for, how much money they need and the terms of repayment. Milaap by raising loans for these borrowers from individuals like you and me is able to provide loans at a much lower interest rate of about 8% which is significantly lower than existing interest rates available to these borrowers. When you lend on Milaap, 100% of your money is loaned to the borrower. To sustain itself, Milaap charges a 5% fee on the loans disbursed to its field partners. So far Milaap claims to have a 100% repayment rate – you get 100% of the money you loan back which you could either choose to re-lend to someones else or withdraw your money.

We recently had the opportunity to catch-up with Milaap’s Co-Founder and CEO Sourabh Sharma.

Deepa Chaudhary (DC): Tell us about yourself and what prompted you to start Milaap?

Sourabh Sharma (SS): I grew up in Lucknow, a small city in North India in a middle class family. My father was in the railways and my mother was a teacher. I moved to Singapore when I was 18 for higher education as I  got an opportunity to study Computer Science at National University of Singapore (NUS). I managed to get a low-interest education loan from a local bank as that was the only way I could afford the high tuition fees. My four years at NUS completely changed me in terms of confidence and helped fuel my desire to create a bigger impact in society, instead of studying to just get a job. I started my first company as soon as I graduated from NUS, I was 21 then, made a lot of mistakes and learnt a great deal along the way. After struggling to run the company for two years, I sold it to OnMobile Global Ltd (Bangalore based publicly listed company) in Dec 2007 and worked there for 3 years to get an experience of the corporate life. I didn’t enjoy it as much and was itching to go back to entrepreneurship – which is when Anoj, Mayukh and I came up with the idea of Milaap.

One of our co-founders, Anoj Viswanathan, was working with SKS Microfinance, when he saw the difference solar lighting made to underprivileged households in Orissa. It was then, that he realized that the lack of low-cost interest was a main factor in the failure of such products to make a bigger impact. He then teamed up with me ( I had sold the product of my first startup and was looking to build a consumer-facing internet start-up for social impact) and Mayukh Choudhury (who was trying to build loan programs for small scale retailers and kirana shop owners selling lighting products in rural Uttar Pradesh) and started Milaap in June 2010.

DC: How big is the organization, could you share some growth numbers?

SS: We started Milaap in Dec 2010 with one community partner that made loans in the area of water and sanitation with around $5000 of funds. We mostly raised capital directly from high net worth individuals and online loans comprised only a tiny portion of it. We continued with this fundraising rate for months, with few months being really bad and few good. Today, we’ve raised close to a $1 million dollars through our online platform and have loaned to over 5,000 poor people.  We deploy almost $100,000 a month which includes both the new capital raised and repayments. Over 12,000 people have loaned money to people in need through our platform, with the average loan amount being $220, which is pretty high as compared to Kiva and other similar platforms where the loan amounts on average are around $25. Almost 98% of people who made their first loan on our platform chose to re-lend to some other borrower instead of taking their money back and so far we’ve had a 100% repayment rate. We are currently working with 16 active community partners

DC: What was it like when you just started and what did it take to grow the idea?

SS: We faced a bunch of challenges when we started, the very concept of enabling poor through loans and not donations was new to people, specially in Asia. People couldn’t relate to the idea of helping poor through loans and were not very forthcoming also the fact that we were a for-profit and not a nonprofit was not accepted easily. We had to work hard to overcome these challenges – one of the techniques we realized early on was that in order to get people to give you had to get them to run their own personal fundraisers. The person running the fundraiser was easily able to get 20-25 of their friends and family together to give without too much effort. People gave to support the person, they really didn’t care for the organization at first. Seeing how successful these personal fundraising campaigns were, we quickly developed a separate web app to enable people to run these campaigns online. We now proactively track people’s birthdays and drop them a reminder in case they would like to raise money for Milaap. We also encourage people participating in marathons, specially the Standard Chartered Marathon in India and Singapore to run for Milaap.

Another way through which we are able to engage people is through corporate campaigns. Initially we held brown bag sessions for various corporate employees to talk about Milaap and how they could participate but we soon noticed that very few people attended such talks. In order to get more participation, we changed our direction, instead of coming across as a CSR activity we approached from the HR angle as an employee engagement activity. We asked the HR of various companies to outsource one of their employee engagement activity to us which we would do for free. We designed a program which included games like Are You Smarter Than A 5th Grader and other quizzes, designed to create awareness about the problems poor face in the country. In the end we show them Milaap videos and then ask if people would be interested in contributing through a one time payroll deduction. We tried a bunch of ideas but these two fundraising techniques really worked well for us. We are also now seeing greater awareness and acceptance of our model. We don’t really engage in any paid marketing activities like online ads etc. Initially when we tried SEO and ads we noticed a very high bounce rate as majoring of people are looking for loans instead to give loans. Marketing has been a challenge for us, we are still figuring ways to crack the various marketing pieces for Milaap.

DC: What are the social media tools you use?

SS: We use Facebook and Twitter to reach out to our audience, social Media is super important to us. It’s the best way to engage and keep our followers informed about Milaap. It’s a great medium for us to share our thoughts. Many others choose to use these channels like a megaphone for their brand, while we at Milaap use it to as a natural extension of our day sharing news, thoughts and  inspirational quotes from around the sector as a whole. We see a very high level of engagement on our content. We also run a lot of contests which are designed to educate our follower about various causes we at Milaap support. On Facebook we have close to 25,0000 highly engaged followers.

DC: Do you measure your social media efforts?

SS: So far our metrics are limited to the data Facebook provides and only since the last two quarters have we seriously started looking into that. What we noticed that on our Facebook page we have more men than women following us but on our website we have more women lenders than men. Looking at this data we are now trying to get more females to like our facebook page. The other insight that’s helpful is we see what kind of posts gets us most engagement so we can continue going in that direction.

DC: What tech tools do you use in your everyday work?

SS: We use Salesforce to manage our borrowers and repayment data. We use Trello and Basecamp for project management and Mailchimp for email campaigns.

DC: Which are some of the brands you look up to and would like to emulate when it comes to using the web?

SS: When it comes to marketing and branding we greatly admire Charity:Water and for scaling up our biggest source of inspiration is Flipkart in India.

DC: What advice do you have for social entrepreneurs who are just starting off?

SS: My advice is that being a social entrepreneur is tough. You have all the challenges of a regular entrepreneur and more. You can’t play on the fact that you are in the social sector and have a mediocre website and talent. You have to provide the same kind of experience to people that they are use to getting especially if you are on the web. Remember that you are trying to get people to do something they usually don’t do, so give them the best possible experience, right from your first sign-up form to your thank you note.