|
|
 |
|
|
|
|
|
|
|
|
 |
|
|
|
 |
|
|
Tufts Luck. eBay founder Pierre M. Omidyar and his wife, Pam, last night gave $100 million to their alma mater, Tufts University, but only on the condition that the school invest the money "in organizations that make small loans to poor people in developing countries," reports Karen W. Arenson in The New York Times. That concept is known as "microlending" and Pierre, omidyar.net, says it's not unlike eBay's business model in some ways. As noted in a USA Today article by Jim Hopkins, eBay, "with 168 million registered users worldwide, proved than an enterprise built around millions of tiny transactions can prosper." Created by Pierre in 1995, eBay today boasts "a $55 billion market capitalization," and "more than 700,000 users now support themselves part time or full time as online merchants." Pierre himself is worth some $10.2 billion. That's a lot of Pez dispensers.
Pierre, who was born in France and met Pam at Tufts, says eBay is all about "economic empowerment." He sees no reason why a similar sensibility can't be exported to places like "India, Bangladesh and other poor countries." Pierre arrived at that conclusion about 18 months ago, but the notion of "microlending" is about 30 years old. We actually wrote about Muhammed Yunus in Cool News a couple of months back -- he founded Grameen Bank, which today "has 3.7 million borrowers, virtually all women, relying on the bank's nearly 1,300 branches covering 46,000 villages," and doling out loans in increments as small as, say, $40 to aspiring entrepreneurs. For example, 26-year-old Bhagyamma Vadla, who lives in the Andhra Pradesh province of southern India, "started a buffalo-milk dairy and clothes-making business with four loans totaling $674 over the past four years ... she now earns $2.44 a day, nearly four times what she earned before the loans."
The Tufts gift "will be made entirely in eBay stock. Tufts will not lend money directly to entrepreneurs," but rather "make a variety of large investments, mostly loans at first, in private partnerships and investment firms. They, in turn, will support as many as 10,000 non-profit and for-profit groups ... Tufts expects to earn 9 percent on the fund's investments -- the same return it now gets on its endowment ... As those investments are re-paid, the fund will keep all the principal and half the income for future reinvestment. The other half of the income goes to Tufts ... Assuming the targeted nine percent return, the fund could generate $4.5 million in additional annual Tufts scholarships." Here's the real play: Over the next ten years, "the Omidyar-Tufts Microfinance Fund could unleash $1 billion in loans ... as capital is repaid, then lent again. That could attract billions more from Wall Street." By investing "IPO-level capital" in microlending, Pierre hopes to lure "risk-averse Wall Street to invest in entrepreneurs such as Bhagyamma Vadla ..." Now that would be a supercattlefragelistic Big Moo (now in its second week as a Wall Street Journal best-seller :-)!
Tim Manners
editor
|
|
|
|
|
|
|
|
|
©2005 reveries.com |
|
