Co-creation for Impact Investment in Microfinance
The case study of Riskebiz, a venture capital fund that is investing in the microfinance sector, examines whether venture capital can help an MFI scale its business and profits and whether developed country investors can marry their business acumen with social responsibility towards the poor.
The boom of microfinance and its high profits in emerging countries has raised investor interest in this sector. The paper demonstrates how venture capital firms use the concept of co-creation to create a multi-pronged attack on poverty while maintaining a profit motive. It illustrates that:
- Poor people require microcredit, as well as micropayments, microinsurance and health check-ups;
- Team of complimentary partners who can standardize and deliver these services can provide a rich experience to the customer;
- Such a team can co-create value, growth, new revenue opportunities and new delivery opportunities for the MFI;
- Donors and social investors who do not have specific knowledge of emerging country markets should consider such issues before investing in microfinance funds.