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Micro and small rural businesses encounter great difficulties accessing capital, technical assistance and market information, significantly limiting their potential for development.
Financing opportunities for this sector have been limited to microcredit or debt, though experience shows that credit is costly and exclusive, making it unavailable to the poorest of the poor. There is thus an unsatisfied demand that requires alternative mechanisms to provide access to capital.
Fundación Capital, through the Little BIG Money project, is exploring the development potential of such alternatives to effectively facilitate the construction and accumulation of assets, and the generation of productive capacity among the poorest sectors.
The Little BIG Money project will replicate and adapt existing instruments of conventional investment, such as financial market structures and procedures and instruments for sharked risk, tailoring them to the needs and opportunities of less-favored sectors. The project will operate a virtual platform for social micro-investment beginning in 2012, with initial deployment in Colombia, Bolivia and Peru. This platform will provide:
- Better visibility for enterprising individuals among potential investors and increased contact between the two; access to capital markets as an alternative to financing that differs from financial markets, at a cost much lower than that associated with micro-credit; and access to support and technical information
- The opportunity for investors to channel funds in a similar means to that of a traditional stock exchange, though adjusted to the particularities of the group receiving the investments. The project will use market mechanisms to evaluate ventures through due diligence and audits, keeping in mind the characteristics and limitations of small enterprise.
Little BIG Money will permit global investors to directly wager on productive initiatives whose success will have an extraordinary impact on socioeconomic development in the rural territories in which they operate. At the same time, it will create a privileged space for the understanding and dissemination of best practices.
Combining these tools with patient investment capital, intelligent subsidies, efficient and productive donations, access to information, and technical assistance, the project will expand and develop micro and small businesses in poor rural areas, with the goal of propelling socioeconomic development through the accumulation of assets, creation of employment, and increased productivity.
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