The Story of Milaap, A Micro-lending Platform [MyWay Series]

Milaap is an online platform that enables you to lend to India’s working poor so they can get access to education, clean water, energy and more. It’s a loan, not a donation. This means you get your full loan amount back once your borrower repays it. So far the company has raised USD $1,60,000 from corporates, high-net-worth individuals and claims 100% repayment rate on the loans.

As part of MyWay series, here is an interview with Milaap’s founding team on the journey, challenges faced and the road ahead.

Pluggd.in: Please share founding team information/their prior experience before starting Milaap. How many of the team members are full-time into this.

Anoj Viswanathan graduated from NUS in May 2010 with a Bachelors in Engineering and Minors in Economics & Technology. Sourabh Sharma, also an engineer with a Computer Science degree from NUS was an entrepreneur working on his mobile technology startup, Microappli, which he sold to OnMobile before deciding to do something to create social impact.

The idea for Milaap was born when Anoj saw what a difference solar lighting made to underprivileged households in Orissa while working at a microfinance institution. It was a great product, but he realised that it seemed out of reach for those who needed it the most. This was because there were no affordable loans available for such goods. He teamed up with Sourabh and Mayukh Choudhury (who was working on rural electrification programs in Uttar Pradesh) and started Milaap in June 2010.

Pluggd.in: How did you spot the opportunity? What was the single biggest motivation in looking at this as a viable business?

India’s poor lack access to the most basic needs like clean drinking water, sanitation and energy. Yet microloans for these are either unavailable or available at very high interest rates. This was what Anoj realised when he saw that the solar lights failed to create a bigger impact. This was the main motivation behind starting Milaap. We also know that there is a pretty large portion of India’s well-to-do population that has the inclination to give for a social cause. We realised that we needed to connect them to those in need, by presenting stories to them. Since there was a huge demand but the avenues for this were non-existent, we saw the opportunity to start Milaap. We envisioned a transparent and effective medium that would help bridge the haves and the have-nots.

Pluggd.in: How much of initial capital did you all put in, in order to start Milaap?

Together, the founders invested about Rs 6 lakhs to get things started.

Pluggd.in: What is Milaap’s business model? How does this work?

The idea is to connect the underprivileged in India with individuals across the world with a social bent of mind who are looking to do good. We work with field partners who are typically NGOs and Microfinance Institutions at the grassroots to help us identify borrowers who are in need of loans.

We upload profiles of borrowers with their pictures and state the need. Someone browsing through profiles can choose a borrower or cause that speaks to them and make a loan. We disburse the loans we raise to our field partners, who in turn disburse it to the borrowers and monitor the usage and repayments. The borrowers repay the loan on a monthly basis and the loan term varies from 12-18 months. The Milaap-enabled interest rate is about 50% lower than the rate charged by existing microfinance institutions.

Pluggd.in: How do you ensure that the entire machinery works and also keep a tab on Field Partners’ actions/disbursement/fund utilization.

We select our field partners after stringent due diligence. We work with partners who have many years of experience in the field and where transparency is a given.
We go on field audits every month to ensure the loans are being disbursed on time and being utilized effectively. We interact with the borrowers and get their feedback. Apart from this, we receive periodic reporting data from our field partners.

Pluggd.in: What has been the impact so far? Please share a few numbers.

3200 people (and counting) so far have benefitted from Milaap. We have raised USD $1,60,000 from corporates, high-net-worth individuals and everyday people. We’ve had a 100% repayment rate on our loans so far.

On Entrepreneurial Journey

Pluggd.in: How do you go about marketing Milaap? What has been your most successful marketing tactic?

Most of our marketing currently through social media or word-of mouth. For example, when someone makes a loan and shares it on Facebook, his/her friends get to know about Milaap. There is constant engagement with our Twitter and Facebook fans. We also send out monthly newsletters to keep friends of Milaap updated.
We also make short videos of stories of change that lenders on Milaap have facilitated. These are basically stories of borrowers who have benefitted from a loan on Milaap. Short, crisp videos are one of the most effective ways of getting the attention of today’s internet savvy users.
In fact, one of the most successful marketing tactics has been the Milaap video (http://vimeo.com/26003944 / also embedded in this article) which was released in June 2010 and went viral. In just about two minutes, it explains to a layman what Milaap is all about and how bringing about change is easy. Because of the simplicity and the animated nature of the video, it was a big hit.
Periodic press mentions have helped us immensely in getting eyeballs as well.

Pluggd.in: What are some of the BIG challenges you guys have faced in growing Milaap? How have you encountered these challenges.

Getting the nod from the RBI to enable us to accept loans from foreign lenders is probably the biggest hurdle we’ve faced so far. For over a year, we worked with the authorities over multiple phone calls, email conversations and trips to Mumbai. It was a lot of hard work before we finally managed to get the approval in August this year. This approval has made us the first, and currently only organisation in the world that supports foreign microlending into India.
The other challenge we are facing is to get across to the common man, that we are different from traditional charity. It is still a relatively new concept, so it is taking some time to catch on.
We don’t have an Indian payment gateway integrated on our site yet. A lot of people are still reluctant to pay via PayPal, which is what we use. We hope that once we have an Indian payment gateway up, we will see a lot more loans.

Pluggd.in: Any support you are receiving from other agencies, Govt, funding houses or corporate?

We’ve received funds from Spring Singapore a government agency, First Light Ventures, an Atlanta-based social venture fund, UnLtd UK and the Grameen-Yunus Social Business fund.

Pluggd.in: Your tips to budding entrepreneurs?

  1. Don’t worry too much about what will work and what will not,  just try out things and learn along the way.
  2. Always make sure there is enough cash in the bank to cover costs. Because no matter how many users you have, no matter how much traction you are getting. When you have no cash, everything comes to a halt.
  3. Its better to release a buggy product now, than to release a less buggy one six months later.
  4. Don’t listen to too much advice, just go with your gut. That is most important!

——–

Milaap – Loan a little. Change a Lot. from Milaap.org on Vimeo.

Add comment

NextBigWhat brings you curated insights and wisdom on product and growth from the wild web.

Over 2 million people receive our weekly curated insights.

Newsletter

Newsletter