Risk and Due Diligence
Risks
We want to make this clear to all of our InVestors; contributing money towards InVestments on inventure.org involves risk. We take risk mitigation very seriously at InVenture, as we also face the same risk you do. We commit capital to every micro-entrepreneur we put on our site, we indeed have "skin in the game." Each micro-entrepreneur is selected by the InVenture team and must go through our rigorous due diligence process before being posted on our website. Despite this, there are still a number factors that can lead to business failures which could impact the amount (if any) of your principal is returned and the amount of SEEDs that are generated. Such risk include, but are not limited to:
Macroeconomic Risks
As part of InVenture's mission to provide capital, guidance and support to micro-entrepreneurs in developing countries, your InVestment will be exposed to the macroeconomic conditions of these emerging economies. While these dynamic economies provide the promise of high growth and opportunity, they are inherently risky. Certain macroeconomic events such as recessions, market dislocations, and financial crises could impact your InVestment.
Currency Fluctuations
Since our micro-entrepreneurs are based internationally, their investments will be disbursed in their local currency. Interest rates, political instability, economic/financial market conditions can affect a currency's value with respect to the US dollar. Given the inherent risky natural of these developing economies, currency devaluation is possible. Currency exchange loss on your principal is possible if the US Dollar appreciates by more than 20% against the local currency.
Political Instability
Emerging economies are more prone to political instability or disruptions. Such political disruptions can have negative effects on a country or region's economy and may severely impair an entrepreneur's ability to run her business.
Business Specific Risk
Our target entrepreneurs are micro-business owners. While we see great promise in our micro-entrepreneurs, and our mission as an organization is support these micro-entrepreneurs and their businesses, these business models come with risk. Each micro-entrepreneur owner faces specific risks that are unique to their particular situations. Your InVestment is exposed to ability of the business owner to sustain profitability in her business
Before InVesting on inveture.org you should think carefully about your risk tolerance. Do not contribute more money to InVestments than you are comfortable losing. Learn about the country you are inInVesting in. Learn about the micro-entrepreneur and her business. Diversify your portfolio across industries and regions.
Due Diligence
Before any InVestment appears on our site, each micro-entrepreneur is handpicked and carefully screen by InVenture's portfolio management team. We look carefully an each micro-entrepreneur's potential to grow their business, to enhance their income and livelihoods and affect change in their communities. Our Due Diligience process is as follows:
Our fellows and portfolio management team do an in-depth country analysis of every location or potential location we operate in. We look at political, economic, regional, cultural, and social conditions carefully before we begin operations in any country.
We then examine the financial services landscape within each country, looking for high quality partnerships with Microfinance Institutions (MFIs) and Non-governmental organizations (NGOs).
With collaboration from our MFI/NGO partners, on the ground InVenture Fellows, InVenture screens entrepreneurs for those that match our specific list of criteria.
We shortlist entrepreneurs which match our criteria and begin an in-depth analysis of each micro-entrepreneur's owner's business model, potential to increase revenues, decrease costs, etc. Our InVenture Fellows work with these micro-entrepreneurs to set goals and targets for their business expansion, as well as create financial models of their business operations and production functions.
Each micro-entrepreneur must pass through InVenture's Investment Committee before her profiles is posted on our site.