April 6: Angel Investing in Start-Up MFIs Featuring Greg Casagrande

Greg Casagrade is bullish on launching new microfinance institutions and investing in the microfinance sector, as he advocated as MFCNY’s guest speaker on Monday April 6.

Founder and President of South Pacific Business Development Foundation (SPBD), Greg also founded MicroDreams, a microfinance acceleration fund working with emerging microfinance institutions, and serves on the boards of the International Association of Microfinance Investors, Microfinance Pasifika and Planet Finance.

After a senior career with Ford Motor Company in Asia, Greg got his start in microfinance after learning about it from his brother; and he was quickly hooked on the dynamism and social impact of the business. He launched SPBD, the leading and first successful microfinance institution in the Pacific Islands region, despite discouragement by regional and development experts. Since then, he has bucked donor-funded approaches by focusing on commercial business practices.

From his experience as an owner-investor in the microfinance and high-tech fields, Greg sees great potential for growth in the microfinance field and advocates for industry development to support growth of microfinance investment vehicles. (Greg is also a founding director of the Ice Angels, Australasia’s largest angel investor group.) Among his recommendations are:
• Increase primary market development – Greenfield MFIs are very transformative, whether funded by family and friends, angel investors ($100K-5M), or venture capital ($4M-100M). Angel (or mentor) capital offers the benefits of helping with management and strategy and offers higher rewards (while more often can lead to busts). Starting up a new MFI is not difficult, he says, if you find the right talent and manage the venture well.
• Develop secondary market to increase liquidity. The industry needs:
o A centralized microfinance exchange
o Increased M&A activity for consolidation. New M&A specialty firms can help.
o Standardized term sheets to provide increased leverage to local owners and to provide greater confidence and efficiency through standardization
o Standardized data reporting metrics for increased confidence and improved equity rating methodologies like S&P’s instead of operationally oriented models
• Greater angel capital for greenfields and scaling up. This can be done by gathering 20 committed investors with a minimal investment of $250K and following traditional angel capital procedures.

Throughout his presentation, Greg’s pure passion and vision for the microfinance field was palpable. He believes the field has the potential to grow exponentially to meet the needs of the unbanked globally. And he exhorted attendees to take action to realize this potential.