In late 2004 and 2005, while working at PayPal, I was working on a p2p microfinance concept with another partner. I later joined Kiva as President but there's a good bit of nostalgia and wisdom in this presentation around p2p microfinance -- a lot of which Kiva has implemented today. :)

1. Broadbasing Investments in Microfinance Tapping an eBa y ® like marketplace (with PayPal ® ) to sustainably deliver lower cost capital to Microfinance Institiutions DRAFT (Please send comments to [email_address] and [email_address] ) About the qualified entrepreneur Name: Puja Patel Loan Amount: $80 Purpose: Fish net for income generation About the NGO administering the loan Location: Gujarat, India Avg Repayment Rate: 97% Website: www.microfinance-ngo.org Powered by Fund a micro-business – help uplift the working poor Category: India > Gujarat State > Fishing Industry

5. Background: Microfinance by the numbers… Poor people in developing countries use small loans to generate more income Microfinance Institutions (MFIs) Organizations in developing countries that administer loans to poor people MicroFinance Institutions (MFIs) Poor People (Borrowers) Loans Repayments Borrowers to date 30 mm Potential worldwide 300 mm ($300 B) Typical loan $10-200 Repayment rates > 95% Interest rates 10%-60% (alt is Loan sharks 100-1,000%) Loans to date $50 B Total MFIs worldwide ~10,000 Growth rate ~30% MFIs Positioned for commercial capital ~100 Cost of capital 8-20% Avg ROA 2.5% 2 2 MicroBanking Bulletin Poor People

14. Team Working Team Premal Shah, Co-founder Premal is a Senior Product Manager at PayPal, an eBay company, and has over 5 years of experience building the world's largest online payment service. He has architected a number of key products, including PayPal's ATM/Debit Card (with MasterCard) and credit program (with GE Capital), and has helped lead the company's thinking around reducing transaction costs and improving buyer conversion. Prior to PayPal, he was a strategy consultant at Mercer Management Consulting. Premal has had a long standing interest in development and microfinance. He was awarded a grant from Stanford University to research one of India's largest microfinance institutions, the Self Employed Women's Association. More recently, Premal took a sabbatical from PayPal to work full time at an Indian NGO, where he focused on how eBay and PayPal could be used to generate income for slum women artisans. Premal graduated with a B.A. in Economics from Stanford University. Tracey Pettengill, Co-founder As a social entrepreneur, Tracey was most recently the CFO and head of marketing for ApproTEC, a microenterprise organization that designs and sells tools enabling people to escape poverty. Tracey is the founder and former CEO of 4charity, an online marketplace for charitable giving. Previous to 4charity, she executed M&A transactions at Robertson Stephens Investment Bank. While at Stanford Business School, Tracey spent a summer working with Calvert Ventures, the first social venture capital fund, and served as a strategy consultant to the Grameen Bank, the world-renowned micro-lending institution. Early in her career, Tracey was a strategy consultant for Mercer, and before that she worked at the U.S. Committee for Refugees in Sudan, ten miles from the front lines of the civil war. Tracey graduated with a B.A. in Engineering/Economics from Dartmouth College and an MBA from Stanford University. Advisors (formal board to be created) Jerry Held Kleiner Perkins EIR Elizabeth Funk Unitus Vice-Chairman Tim Oden Schwab Institutional Vice President Sarah Leshner Women’s World Banking Nandini Pandhi Women’s World Banking Dave McClure SimplyHired VP Marketing Aman Verjee PayPal Strategy Robert Chatwani eBay Internet Marketing

16. See MFI Survey

17. Sample MFI Survey Output Cost of Providing Borrower Information Task 1: Provide borrower data Task 2: Provide borrower photo (optional) Task 3: Provide borrower repayment updates Legal / Accept-able? Already Captured? # of hrs req’d for batch of 100 # of hrs req’d for batch of 500 $ wage per hour of staff member Legal / Accept-able? Already Captured? # of hrs req’d for batch of 100 # of hrs req’d for batch of 500 $ wage per hour of staff member Legal / Accept-able? Already Captured? # of hrs req’d for batch of 100 # of hrs req’d for batch of 500 $ wage per hour of staff member MFI Name Sample   1 1 3   1 5    1 1  SEWA SKS

19. APPENDIX

20. Example ‘ Microcredit Loan Request’ on eBay.com Digitial photo of MFI approved loan applicant (helps to establish personal connection) Key info on the individual loan seeker, purpose, terms, etc* Description of the MFI (helps to establish credibility) *This info is already captured as part of the MFI loan application process (no new info is needed) Note: While eBay may be ideal platform for the pilot phase, an independent website may be more suitable in the longer term unless an eBay category were created.

21. Mechanics Detail on how our “Pay as you go” system works INTERNAL - DRAFT

22. Current Microfinance Landscape Emerging Mkt Banks Microfinance Institutions (MFIs) MFIs (Loan Administrators) $15B Borrowers International Banks Sources of Capital Capital Repayments Intermediaries $550mm Loans Repayments Capital Repayments Capital Repayments Guarantee products Challenge = distribution A secondary market is needed Venture Funds (Unitus, FINCA) Private Placements (MicroVest) Governments $900mm (80% direct) Poor People Individual Investors

23. Representative MF Funds Regional Multi-Regional Global Legend: Circle size = Fund size Circle color = Debt rate (red = market, green = below market, yellow = equity only) 1 3 2 5 4 6 7 8 9 10 11 12 13 14 15 16 17 Debt/ Equity 100% Debt 20/80% 80/20% 60/40% 40/60% 100% Equity Source: Unitus 2003

28. Marketing strategy: Contract with private banks Investment listings MicroFinance Trading Floor Individual investors Individual investors Individual investors Individual investors MTF intends to contract with existing private banks, sharing the transaction fee, to distribute MF investment products to their mom and pop investors

29. Our Economics ROI % 0-8% Individual lender MTF Funds Final borrower interest rate 3% 0-30% 10-60% 10% 1 MFI admin costs Current Sources of Capital Private Funds Venture Funds Governments/ Bilateral Institutions Commercial Banks Cost to MFI 4-12% 2 0-10% 15-30% 10-30% 2.5% 3 MFI spread 1 Women’s World Banking 2 MicroVest expects 8-10%, GrayGhost expects 4-5% 3 MicroFinance Gateway FAQs 0-5% Default rate DRAFT

31. Targeted MFI for Pilot DRAFT - APPENDIX SEWA Bank & Ahmedabad Self Help Group District Association

33. Breakdown of borrower interest rate: SEWA Bank / Ahmedabad Self Help Group District Association 8% 3% 10% Spread captured by bank Spread captured by SHG operations 3% 24% 18% 6% Interest rate SEWA Pilot Case Study

37. Proposed Timeline Day 55 (?) : Borrower makes 1 st repayment to District Assc (as normal) Day 115 : Borrower makes 3 rd repayment to District Assc (as normal) Day 121 : Ashutosh remits partial principal to each eBay lender via PayPal Days 15 : Shrutibhen disburses loans to SHG District Association; eBay sponsored loan applicants receive lower interest rate Day 1 : Loan applicant approved by SEWA Loan Committee Day 14 : Ashutosh delivers to Shrutibhen final list of eBay sponsored loan applicants and requested amount in cash Day 2 : Approved loan applicant info given to Ashutosh; loan request posted on eBay Days 2 - 12 : eBay members have 10 days to select and sponsor a loan request Day 25 (?) : District Assc on lends to SHG Leader; Leader on lends to SHG borrower Day 85 : Borrower makes 2 nd repayment to District Assc (as normal) Day 120 : Shrutibhen calculates the total repaid principal for each eBay sponsored borrower so far ; remits to Ashutosh in cash Day 121 - 325 : Borrower continues to repay 10% each month Day 330 : Final repaid principal calculation for each eBay sponsored borrower and funds transfer to Ashutosh Day 331 : Final repayment via PayPal to eBay lender SEWA Pilot Case Study

38. Cost of Capital: Room for improvement Source: Microcredit Interest Rates in Bangladesh: ‘Capping v Competition’ David L. Wright. Data above is author’s averages for all of South Asia. 10% Spread for operations 44% 14% Interest rate 20% 2% 7% If capital costs could be reduced from 14% to 4%, operating budget increases by 35% MFI Borrower Interest Rate Composition -- average across South Asia

39. Viral Product Marketing Target segment can be reached via email Unique Value Proposition