Unlike Microfinance: Depth vs. Breadth

It is never easy to describe a new business model…. particularly to folks that have little reference for the context in which it is being launched. When we begin explaining what Karisimbi Partners is doing, somebody will inevitably respond…. “Oh, you’re doing microfinance?”

Indeed, we founded Karisimbi Partners to help alleviate poverty and expand sustainable market opportunities. Like many microfinance pioneers, we are motivated by the social impact of our venture (not merely financial returns). We share a belief that the dreams and relationships of poor individuals are the source of tremendous wealth and dignity (which banks have traditionally ignored). But our similarities may end there….

Our focus is on depth, not breadth. Microfinance institutions often make small loans to hundreds or thousands of new ventures. Karisimbi Partners primarily invests relationally (not financially) with just a few high-growth ventures at a time, each of which may someday employ hundreds or even thousands. Microfinance often deals with small business operators that may never grow or create stable jobs for others. Karisimbi Partners identifies and supports true entrepreneurs with proven ideas and great ambitions. Many microfinance institutions begin by lending capital, and then provide related social services. Karisimbi Partners begins by building social capital and management capacity to ensure each venture is ready for financing and future growth. By focusing on a few promising ventures, Karisimbi Partners’ can offer the hands-on assistance to help client companies employ many, export often, contribute taxes, build industry sectors and establish role models which the new generation of business leaders can follow.

Indeed, microfinance is an impressive and crucial model for creating broad market opportunities in developing countries… and will remain a critical factor in the war against poverty. I am proud to be an advisory board member of the best microfinance organization I know, HOPE International, and very much agree with their leader’s recent assertion (on this blog) that Rwanda is ripe for an integrated approach to economic development. Yet our model is certainly different… Karisimbi Partners attempts to pick up where microfinance leaves off, walking alongside select entrepreneurs to significantly impact a few ventures that can make a great difference.

In Rwanda today, it seems calls to build the "missing middle" in this emerging economy also call for a model that has not yet been established…so we’ll have to keep explaining why we are not a microfinance organization.

Onward & Upward,

-Carter