EDA CapitalConnect: An Online Platform for Social Enterprise Financing

EDA CapitalConnect: An Online Platform for Social Enterprise Financing

Daniel Brett (EDA CapitalConnect, USA) and Nikias Stefanakis (EDA CapitalConnect, USA)
Copyright: © 2011 |Pages: 25
DOI: 10.4018/978-1-61520-993-4.ch013
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Abstract

Since its inception in July 2008, EDA CapitalConnect (EDACC) has sought to address inefficiencies in the market for funding to social enterprises worldwide. To tackle these challenges, the company has developed an online platform that allows social enterprises and institutional funders to communicate with one another, initiate financial transactions, and analyze market trends. The platform seeks to increase deal flow and transparency in the social enterprise space by facilitating information dissemination and the exchange of funding offers between capital providers and seekers of all sizes. As the platform develops, the challenges of achieving financial sustainability and scale will require EDACC to continue to fine-tune its services to meet the evolving needs of the social enterprise community. EDACC’s experience in its nascency suggests that technology providers to microfinance institutions and social enterprises – particularly start up organizations – must pay close attention to the behavior of their target users, and modify their services based upon trends in usage and market perceptions.
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Background

EDACC was conceived by Director and Founder of EDA Rural Systems, Mr. Sanjay Sinha. In 1983, Sinha established EDA Rural Systems as a development sector consultancy, research and capacity-building organization. Through its trainings and academic publications, EDA Rural Systems became well-known in the development sector and in Asia’s microfinance sector in particular. As the sector grew, Sinha observed that there was a pressing need to improve the availability and flow of information between microfinance institutions (MFIs) and other industry stakeholders, which he believed could reduce the information asymmetry in the market for capital.4 From this observation and the success of EDA Rural, Sinha and his team launched Micro-Credit Ratings International Limited, (M-CRIL), which developed and implemented the concept of producing credit ratings of MFIs. In addition to a review of financial performance, these ratings include a risk assessment, projections of future performance, and recommendations for investment. Over its first decade of operations, M-CRIL expanded its services in terms of the number of MFIs rated and the quantity of funds channeled to MFIs. In 2005, EDA pioneered the assessment of the effectiveness of MFIs’ systems and services for the achievement of its social objectives by developing the first social rating tool for MFIs (Sinha F., 2006).

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