At MicroVest, we seek to support financial inclusion for un- and underbanked microentrepreneurs and small businesses in emerging markets. The individuals we look to support through our investments are those that were previously excluded from and/or unable to access credit through the formal financial system. To achieve this, we allocate capital to responsible, well-run Microfinance and SME Finance Institutions that provide productive loans to underserved clients and act as financing agents in a niche large untapped by global banks.
We believe that the availability of financial products, including loans, savings insurance, and payment services, are necessary for underserved microentrepreneurs and small businesses to successfully compete and grow in their respective markets. When the un- and underbanked are financially included, they can more effectively manage day-to-day finances, build financial resilience and knowledgeably use financial products and services to pursue their goals.
Without responsible Microfinance and SME Finance Institutions to serve un- and under-banked end borrowers, irresponsible actors (more commonly known as “loan sharks”) in this sector can contribute to borrower over-indebtedness and/or threaten the stability of a country’s financial sector through high delinquencies and/or nonperforming loans. Due to the position of trust that financial institutions occupy and the importance of empowering end borrowers throughout their financial lives, MicroVest believes scaling institutions with integrity is even more critical and our work anchors on this principle.
We believe and our track record demonstrates that selectively allocating private debt capital to Microfinance and SME Finance Institutions can generate risk adjusted returns in addition to quantifiable social impact. Our investment process combines a proprietary top down country risk assessment with rigorous bottom up due diligence to identify Microfinance and SME Finance Institutions whose culture and lending policies are aligned with supporting end borrowers in the communities they serve.
Given that much of low-income lending is unsecured, risk management is our highest priority. To protect investors’ capital and ensure portfolio quality, MicroVest only invests in institutions with strong credit profiles, sound operations, and business models that possess favorable strategic and financial prospects. The processes that these institutions utilize for borrower selection, underwriting and monitoring are critical, and our due diligence efforts focus on these.