Small Business Labs

Microfinance Draws Mega Players

One last recent BusinessWeek piece takes a look at the huge amounts of venture money gong into small- and micro-business loans in the developing world.

Microfinance Draws Mega Players:
Hedge funds, VCs, and other big investors are seeing the huge profit potential in tiny loans

If you think microfinance is the exclusive domain of do-gooders seeking a free-market cure to global poverty, think again. While much of the money flowing into loans for the working poor is indeed ponied up by people with high-minded goals, these days its coming increasingly from those with a sharp eye for the bottom line—raising new questions over how to balance the altruistic mission of microfinance with the pursuit of profits.

Small Business and Financial Derivatives

The Wall Street Journal has an article on small businesses using financial derivatives to help manage and control costs.  Derivatives are financial instruments that are based on or derived from some underlying asset or index.  Farm commodity futures are probably the best known, but there are derviatives on a large and growing number of physical and financial assets.  See Wikipedia for a more complete description of deriviates.

A major trend we've been tracking is how advanced technology and access to third party tools and infrastructures are allowing small businesses (and even individuals) to use sophisticated capabilities that even a few years ago were limited to large corporations.  Small business use of financial derivatives is an excelent example of this trend.  We will cover this trend in more detail in Installments 2 and 3 of the Intuit/IFTF Future of Small Business report series.  Installment 2 will be released in a few weeks and installment 3 will be released later this year.