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Help us democratize access to funding through a mutual guarantee fund
We are looking for $30k to establish the fund.
The money will be used as a guarantee for a loan to an entrepreneur selected by his/her peers.
Please consider contribute, because this entrepreneur could be you: you today, or you tomorrow if you are just getting started, or maybe the you from a few years ago when you were looking for funding for your venture. And if this entrepreneur is not you, you should contribute because entrepreneurs are the vital force of our economy, and we need to promote entrepreneurship to build a better future for every one of us.
If you are reading this, you have done half of the work, please consider giving $25 or more to this cause.
Our Story
Today 80% of entrepreneurs looking for money to start their business are not being helped: they are too early stage for banks and they do not fit the very narrow scope of Angel Investors or Venture Capitalists. So in most cases they use their own money, or money from friends or family, or credit cards.
Help us democratize access to funding through a mutual guarantee fund
We are looking for $30k to establish the fund.
The money will be used as a guarantee for a loan to an entrepreneur selected by his/her peers.
Please consider contribute, because this entrepreneur could be you: you today, or you tomorrow if you are just getting started, or maybe the you from a few years ago when you were looking for funding for your venture. And if this entrepreneur is not you, you should contribute because entrepreneurs are the vital force of our economy, and we need to promote entrepreneurship to build a better future for every one of us.
If you are reading this, you have done half of the work, please consider giving $25 or more to this cause.
Our Story
Today 80% of entrepreneurs looking for money to start their business are not being helped: they are too early stage for banks and they do not fit the very narrow scope of Angel Investors or Venture Capitalists. So in most cases they use their own money, or money from friends or family, or credit cards.
As an example, data from the 2009 Inc 500/5000 list shows that for the top 5000 fastest growing companies in the US money is coming from a combination of the following sources:
- 87% personal savings
- 26% friends and family
- 23% angel investors
- 22% credit cards
- 18% bank loans
This is a huge slice of the entrepreneurial population that is not being serviced.
Since not everybody has money of their own, or friends or family with money, and since credit cards are expensive, it is leaving many would-be entrepreneurs out of the entrepreneurial opportunity.
The Entrepreneur Commons Mutual Guarantee Fund is bringing abundance thinking to this ecosystem. Instead of focusing on selecting the best few (scarcity thinking), Entrepreneur Commons welcomes everybody and let entrepreneurs grow to the best they can be. It works, it scales and it sends a clear message to all that entrepreneurship can be an option for them too.
The Entrepreneur Commons Mutual Guarantee Fund is a project of Community Ventures, a 501(c)3 nonprofit organization that grew out of Michael Shumans book, Going Local: Creating Self-reliant Communities in a Global Age (hardcover by Free Press, 1998; paperback by Routledge, 2000). The book elaborates principles and policies for community economic development through the support of locally owned small businesses that are rooted in and dedicated to the communities where they are located and that prevent leakage of local dollars.
Entrepreneur Commons is a not-for-profit organization providing peer-support to entrepreneurs in the form of small chapters of 5 to 7 people who meet on a regular basis to help each other. The organization went from 2 chapters in 2009 to 19 chapters around the world (Americas, Asia and Europe) in 2010.
We are now bringing funding into this ecosystem through a mutual guarantee fund pulled from entrepreneurs-members, plus their friends, family and supporters, that will be used as a guarantee for loans, to help projects within Entrepreneur Commons.
The Impact
With a Mutual Guarantee Fund providing a guarantee for loans, we can give entrepreneurs that are not being helped otherwise an opportunity to get their business going.
While this campaign is for a small amount, it is a big step forward, the impact is huge:
1. From the entrepreneur prospective it sends a clear message that help is on the way, and that starting a business can be accessible to everybody if we implement the right process. The mutual guarantee fund removes the current existing barrier that you cannot get outside help to start your business in 80% of the cases. The community of entrepreneurs selects the project with the most chances of success and use the guarantee to establish a loan to make this business successful. It is a virtuous circle: once the members of Entrepreneur Commons select one of their peer, they will make sure he is successful with his project so that the money can be used to guarantee the next loan, and the next one, etc...
2. From the partner bank prospective it helps resolve 2 issues related to small business loans: underwriting and collection.
- Underwriting is done through peer-selection, which brings scale to the process
- Collection is helped by the fact that the entrepreneurs getting the loans are members of a support group. They attend meetings on a regular basis, we know who they are, how they manage their project, and how the project is doing over time.
The concept of Mutual Guarantee Funds is not new: it has been used successfully in Europe since 1917, and related loans have a very low default rate of 0% to 5%. The banks are so comfortable with the concept there that the guarantee typically represents between 2% and 8% of the total amount of loans.
And the advantage of the Mutual Guarantee Fund is that it can be re-used over and over. Once we start, and as long as default rates are within a reasonable range, we can help entrepreneurs forever by recycling the guarantee.
Ultimately the impact is jobs creation - if we help businesses get off the ground through this process, we will contribute to bringing jobs back into the economy at a very low cost.
What We Need & What You Get
For this campaign, we are raising $30,000 so that we can do one loan for $25,000 dollars and showcase the process.
This $25k amount is coming from another statistic from the Inc 500/5000 list of fatest growing companies in the US, which is that the average capital needed by companies to make the top 5000 list is $25k.
Once we raise the $30k, and after fees to cover the cost of the campaign (Indiegogo, Community Ventures, Entrepreneur Commons), we will have $25k that we will use for a guarantee for a loan that will be managed by a partner bank.
Entrepreneurs from the Entrepreneur Commons chapters will select who among them should get the loan, and we will tell our partner bank to make the loan to this entrepreneur.
Your contribution is your opportunity to participate in the implementation of a new model to finance entrepreneurs who do not get access to funding otherwise.
Entrepreneur Commons Mutual Guarantee Fund is a project of Community Ventures. Funds will be received and managed by Community Ventures. Community Ventures is a 501c3 organization and your donation may be tax deductible.
Other Ways You Can Help
Whether you can contribute dollars to this campaign or not, please spread the word and forward this request to anyone you know who is an entrepreneur or is interested in bringing jobs back into the economy through entrepreneurship.
Contributing to the campaign can be as simple as sending an email.
Thank you for your help.
For more infornation on Community Ventures: http://c-ventures.org/
For more information on Entrepreneur Commons: http://www.entrepreneurcommons.org
