Startups
Entrepreneurs / International / Startups

Why $200,000 is a huge deal for this DC startup

With its network of African entrepreneurs, D.C.-based microlending platform Zidisha shows how hundreds of dollars can make a big impact.

Senegalese seamstress Ndeye Bineta Sarr. (Courtesy photo)
An amount like $200,000 may seem shrugworthy in a tech world where funding rounds tend to come in the millions and the north star for every startup seems to be the $1 billion “unicorn” label. But for local microfunding platform Zidisha, it’s definitely a big deal.

Zidisha, which recently participated in the DC Women’s Startup Challenge, just surpassed the $200,000 milestone for monthly loans, thanks in part to piecemeal funding of about the same amount raised last year.
That funding, which came via Y Combinator and a handful of tech entrepreneurs, was enough to help Zidisha scale its platform successfully — something critics said would be the decentralized microlending platform’s biggest challenge. As a result, the platform has now processed more than 17,000 loans over the course of several years and, with the $200,000 milestone reached last month, more than doubled last year’s monthly average.


Because Zidisha is focused on connecting people in wealthy countries with self-employed workers in developing countries, that level of growth and lending has an outsized impact, too. “A dollar goes about 10 times as far in Africa as it does here relative to people’s income,” founder Julia Kurnia said.
In developing countries, few workers have formal jobs. Instead, their livelihood comes from tasks like raising cattle or tailoring clothes or selling grains. For such small businesses, the biggest constraint is often capital — and seemingly small amounts can make a significant difference.
“Someone might sew dresses by hand and could quadruple her income if she had a sewing machine,” Kurnia explained. But getting that equipment isn’t easy when a sewing machine costs hundreds of dollars and a traditional loan models slaps steep interest rates on small amounts to cover intermediary costs.
“The world’s poorest people are paying the world’s highest interest rates,” Kurnia added, noting that the average interest rate is around 40 percent and can run as high as 80 percent — rates that naturally and rapidly eat into profits.
Eliminating those interest rates means breaking down a key barrier to capital for workers in developing countries, allowing for the lending of a hundred or so dollars here and there to make a tangible impact.


Just consider an example like Ndeye Bineta Sarr: A seamstress in West Senegal, she bought her first electric sewing machine thanks to a Zidisha loan and has since also rented a boutique workshop, hired an employee and established a working capital fund using the platform. Prior to the first loan, Sarr was sewing by hand and filling only one or two client orders at a time. Now, she can fill up to a dozen at once.
The list of examples goes on: One user is currently requesting just $60 to open a grocery story and another is in need of $100 to purchase a dairy cow. Add it up, and it’s easy to see why Kurnia is so excited about reaching a grand total of $200,000 in loans during a one-month period. That monthly total could fund over 3,300 grocery stores, for instance — and it was largely enabled by Zidisha’s few hundred thousand dollars of funding.

Before you go...

Please consider supporting Technical.ly to keep our independent journalism strong. Unlike most business-focused media outlets, we don’t have a paywall. Instead, we count on your personal and organizational support.

3 ways to support our work:
  • Contribute to the Journalism Fund. Charitable giving ensures our information remains free and accessible for residents to discover workforce programs and entrepreneurship pathways. This includes philanthropic grants and individual tax-deductible donations from readers like you.
  • Use our Preferred Partners. Our directory of vetted providers offers high-quality recommendations for services our readers need, and each referral supports our journalism.
  • Use our services. If you need entrepreneurs and tech leaders to buy your services, are seeking technologists to hire or want more professionals to know about your ecosystem, Technical.ly has the biggest and most engaged audience in the mid-Atlantic. We help companies tell their stories and answer big questions to meet and serve our community.
The journalism fund Preferred partners Our services
Engagement

Join our growing Slack community

Join 5,000 tech professionals and entrepreneurs in our community Slack today!

Trending

How to encourage more healthcare entrepreneurship (and why that matters)

Howard University’s Black Commerce Conference doubles in size for its return on Juneteenth

Welcome to Camp Apple Intelligence

Find out what type of heat wave you’re really in for with NOAA’s HeatRisk dashboard

Technically Media