In developed countries, SMEs are the main drivers of economic growth and employment, but in less developed regions, SMEs do not appear as often. This is not because the people there are less entrepreneurial or forward thinking. It is because there is a lack of financing needed to grow the business. Start-ups and micro-businesses have access to micro-finance and larger companies have access to bank loans, but SMEs find it hard to obtain funding and are therefore not yet the engines of growth and employment that these countries need. They are known as the ‘missing middle’. Lending to SMEs in developing countries leads to attractive financial returns, but above all, it generates a huge social impact.
Lendahand unlocks the potential of these (missing middle) SMEs. Via the crowdfunding platform Lendahand, funders can help SMEs grow while receiving a fair and attractive interest rate of 3-4%. This enables the SMEs to employ people within the community and contribute to social development.
Lendahand’s online platform went live for the public in 2013. Peter Heijen is the founder of the crowdfunding platform, which offers the affordable capital necessary for SMEs in emerging countries to grow. The platform is a B Corp certified social enterprise, based in Rotterdam. In 2014, Peter Heijen also founded The Lendahand Foundation as a non-profit organization with ANBI status.
Ever since Peter Heijen was a little kid, he wanted to change the world. He decided to create Lendahand crowdfunding platform after his trip to Nepal, India and Bangladesh. During that trip, he witnessed a lot of poverty and realized that the strongest weapon against this is entrepreneurship and job creation. However, many business owners do not have access to affordable finance. Crowdfunding seemed like a good solution and that is why he started the organization Lendahand. However, capital alone is not always enough. Access to knowledge in the form of training is just as important, because of that he decided to expand his initiative by establishing Lendahand Foundation.
In the Lendahand works 18 people, including growth strategists, chief, marketing team and legal and economic advisers.
A team including a manager, adviser and three volunteers manages the Lendahand Foundation. The current Board of the organization is unpaid and includes Peter Heijen (chairman), Ron Schuurman (treasurer) and Wilbert Lek (secretary). The Board meets four times a year.
Lendahand works closely with local business in the countries where the crowdfunding platform is operating. The organization is trying to expand in other countries and regions.
The mission of Lendahand is creating new jobs for companies in emerging countries and enabling people there to improve their access to basic needs. In this, Lendahand wants to alleviate poverty.
Lendahand is an online impact-investing platform where socially conscious investors can invest in entrepreneurs and sustainable initiatives in emerging countries.
The shared vision of the team is ‘Sustainable change in emerging countries can be realized when social impact and financial returns are combined’. The ultimate goal is no more poverty in the entire world (in which case Lendahand will not exist anymore).
The team strives to make Lendahand a world-wide initiative through which people from all over the world can provide fair and transparent financial support to entrepreneurs in emerging countries. Lendahand will provide structurally sound propositions that will focus on lowering the interest rates presented to entrepreneurs.
The goals for 2020 of the organizations are:
Lendahand is the only platform that provides funds to small and medium enterprises in emerging economies as the Philippines, Ghana, Colombia, Mongolia, etc. and tries to bring positive social impact with financial return.
Crowdfunding with Lendahand gives investors total control of where their money is invested. People can choose projects based on criteria such as the social impact that the investment will make, the country in which the project is located, investment maturity length, or interest rate. All investments made through Lendahand start at €50. Above that minimum, the funders can determine how large or small of investments want to make. There are no costs associated with crowdfunding a project.
Once the crowd of investors has funded the full project amount a business is seeking, the money will then be wired to the local partner or directly to the business on the first day of the following month. At that point, the investment will begin earning interest. Investments are repaid in equal installments, plus interest, every six months. Returns are based on the amount invested and the established interest rate of the projects.
However, capital alone is not always enough. Access to knowledge in the form of training is just as important. To do so, in 2014, Peter Heijen founded The Lendahand Foundation as a non-profit organization with ANBI status.
The Lendahand Foundation provides local SMEs with relevant knowledge and skills to strengthen and grow their business. In 2016, Lendahand Academy was founded, an interactive training program existing out of four modules: Business Model Canvas, Marketing & Sales, Financial Management and a Graduation Day. The Academy offers both a basic and advanced level. The Lendahand Foundation is now active in the Philippines, Ghana and Mongolia. Since its launch in 2014, 30 trainings were already provided to 506 entrepreneurs.
The unique combination of providing SME support (Lendahand Foundation) and affordable capital (Lendahand Mesofinance) creates a leverage effect in developing future proof SMEs.
The main target group of Lendahand crowdfunding platform are small and medium size companies in developing countries as the Philippines, Ghana, Colombia and Mongolia. The organization also supports people with entrepreneurial qualities by providing them training (through the foundation) and finances (through the crowdfunding platform) to start their own business.
One of the challenges in front of the Lendahand’s team is the coordination of the international network of local businesses, on the one side, and investors, on the other. To ensure the positive social impact of the crowdfunding platform upon the local businesses in the developing countries, the founder of the platform created the Lendahand Foundation to provide training to local entrepreneurs. In that way, Lendahand offers all needed conditions for development of local businesses.
Lendahand crowdfunding platform has positive social and economic impact in developing countries. For the last five years, the total number of investments are 96709 and all 2522 offered campaigns have been fully funded. In 2017, Lendahand won Positive Finance Award and in 2016, the team won Crowd Power Award.
Additionally, Lendahand Foundation has conducted 57 training sessions and trained more than 810 entrepreneurs.
The main lesson learnt is that the new methods for funding businesses such as crowdfunding can be applied not only in well-developed countries, but also to be used as instrument to alleviate poverty in poorer countries and regions. Crowdfunding is possible due to new information and communication technologies, which bring changes in everyday lives of people. However, social entrepreneurs are able to find their application in less developed countries in order to overcome existing problem as poverty, unemployment and hunger.
As an international initiative, the model Lendahand cannot be replicated in the Netherlands. However, in the country are operating other crowdfunding platforms and new ones are emerging. They can use Lendahand as a good example of a successful crowdfunding platform, which lead to social and economic benefits in developing countries.
The model of the crowdfunding platform can be transferred in other countries and regions where there is no enough financial instruments and educational programs for entrepreneurs. The model itself connects people transnationally and an initiative started in a developed country can have a positive impact on entrepreneurial activities in the other end of the world.