Entrepreneurs #ChangeTheWorld
JAN 24, 2018 @ 12:58 PM
Anne Field , CONTRIBUTOR
Opinions expressed by Forbes Contributors are their own.
Moeda
Taynaah Reis
In the world of fintech and social entrepreneurship, the hot ticket is blockchain. An increasing number of social enterprises are turning to the technology, the underpinning of Bitcoin, as well as cryptocurrency, to create secure, accessible platforms for the poor around the world.
One of the latest entries is Moeda. The New York City-based startup, launched last year, has a micro-lending platform that uses blockchain and a cryptocurrency named MDA to connect investors to unbanked populations in emerging countries.
For now, the focus is on cooperatives in Brazil, especially on women-owned enterprises, offering interest rates of 15%. That's compared to the 120% or so they would usually have to pay other lenders, according to CEO Taynaah Reis. The cooperative structure is common in Brazil, according to Reis; enterprises encompass everything from milk production plants to yucca farms.
The current system, according to Reis, is bad for both cooperatives and investors. Many of these cooperatives, mostly located in rural areas, have a tough time getting loans, and that’s especially true for women. Generally they borrow through a government program, but the red tape and bureaucracy often prove to be impenetrable. Plus, even when they get a loan, they don’t receive technical assistance.
For investors, there’s the problem of trust in the system, especially in light of Brazil’s recent plague of corruption.
With that in mind, Moeda uses blockchain technology, which is often described as an open distributed ledger, to create a platform through which investors can easily track projects in a transparent way. Result: All activities are out in the open, nothing can be erased and you know your money is getting into the right hands. “Over the years, I’ve seen investors consider social enterprises in Brazil to be a risk,” says Reis, “Trust is important, especially in a country like Brazil--and blockchain allows us to nurture that trust.”
nothing can be erased and you know your money is getting into the right hands. “Over the years, I’ve seen investors consider social enterprises in Brazil to be a risk,” says Reis, “Trust is important, especially in a country like Brazil--and blockchain allows us to nurture that trust.”
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Plus, the company provides not just access to funding, but help in creating a business plan, feasibility studies and other technical assistance. And it considers nontraditional credit history factors, such as the impact cooperatives have on their communities, in addition to placing a priority on investing in women.
So far, according to Reis, they’ve raised money from a large crop of investors--841--mostly from China, which has a long history of trading with and investing in Brazil. The majority are 22-to-28-year-olds interested in combining impact and investment.
In August Reis and her comrades raised $20 million over a two-week period, allotting $10 million of that to funding projects. It's invested in 18 of them so far, with loans ranging from $50,000 to $300,000. Case in point: a six-month $55,000 loan to Hope Valley, a 10-year-old cooperative pumpkin and yucca farm and food processor in Formosa, Brazil. The money helped pay for an irrigation system and food processing equipment. Thanks to the investment, the co-op is able to produce five times more than before, according to Reis. And the number of contracts to public schools grew from 30 to 90.
The next step will be to launch an app over the next few months allowing individual and institutional investors to make direct investments of MDAs into companies. So there will be no intermediary. Investors will buy the MDA tokens, much as they do when purchasing Bitcoin, and make their investments through the app. Then entrepreneurs will receive the loan in MDA and exchange their tokens for local currency. The company is working with a group of cooperative banks in Brazil serving local populations in underdeveloped areas.
It all started last March, when Reis organized a UN-sponsored hackathon focusing on applying blockchain technology to meet the UN’s Sustainable Development Goals; she also served as a judge. One of the participating teams submitted the basic concept behind Moeda—and won. Intrigued by the idea, Reis approached winners Isa Yu and Brad Chun and suggested they start a real company, using the prize money to launch the startup.