Aeloi Technologies

In emerging markets, audits on informal sector enterprises are nearly impossible. Micro-entrepreneurs also often cannot fulfil traditional requirements for loans, i.e. collateral ownership, credit history, and income proof. As such, microfinance business loans and personal loans usually have the same high interest rate. This leads to an US$8 trillion credit gap for micro-enterprises globally. 

Our solution is a loan insight software for microfinance institutions to disburse digital loans that can only be spent at accredited vendors. For example, an agriculture loan can only buy agriculture related goods and services. Like an automatic audit, this ensures the loan is used towards productive assets. The repayment probability is higher, which lowers interest rates.

We help foster trust for impact-oriented funders to invest in the grassroots economy. Scaling globally, we aim to unleash the entrepreneurial potential of 400 million informal sector businesses to create solutions tailored to local clients.

Affordable financing is one of the largest barriers to powering a COVID-recovery and sustained growth of women-led micro-enterprises. Globally, 163 million informal women-led enterprises are constrained by a US$ 1.7 trillion financing gap. In Nepal, 90.5% of women in employment are in informal sectors; 79.5% of households do not have a single female member who owns fixed assets. 

Our company believes the massive financing gap for women-led micro-enterprises is due to a lack of trust rooted in women being “invisible” to formal financial systems. The majority of women cannot fulfil traditional financing requirements (collateral, credit history, income proof) which are based on patriarchal norms of formal employment and land ownership. 

In addition, the gender gap in mobile internet usage is 70%, which means internet-based digital banking solutions still cannot be widely adopted. Women in Nepal also have a 60% literacy rate, 20% lower than men. While the microfinance industry has worked hard to create structures (such as group-based, non-collateral loans) and processes (such as thumbprints instead of signatures) to increase financial inclusion, there is still a lot of work to be done. We believe in building women-centered technology to power a trust evolution in financing. 

The problem of “how to grow trust at the last-mile?” drives our company. Aeloi Technologies is a loan insight software that uses digital tokens to trace financing that is invested into micro-entrepreneurs and value chains. To directly reach the grassroots economy, our platform connects microentrepreneurs, financial institutions, and vendors in a digital financial ecosystem. Our user interface doesn’t require smart phones or mobile data, making our technology as inclusive as possible. We automate the costly process of manual fund monitoring in field operations.

We partner with microfinance organizations to issue digital business loans for micro-entrepreneurs. The loans can only be used at pre-approved vendors. For example, Laxmi is a poultry farmer with an agriculture digital loan from our partnering microfinance institution. Through her feature phone, Laxmi buys chicks, feed, medicine, and business training from vetted agriculture vendors by sending SMS. The vendors redeem the tokens into cash from the MFI once the goods and services are delivered. After a few months, Laxmi sells her chickens and repays her loan. 

We help build a mutually beneficial agreement: microentrepreneurs gain lower interest rates by increasing their visibility to formal systems; lenders gain more tracking ability and lower monitoring costs.

As a company co-founded by women, we are particularly focused on increasing financial inclusion for women entrepreneurs who are from marginalized communities, especially due to caste or socio-economic discrimination. By helping women provide trustworthy data on their entrepreneurship abilities, we aim to reduce human biases during the loan approval process. We work at the intersection of finance and gender to create a system designed for women, rather than adapted for women. 

We work with informal sector women microentrepreneurs in Nepal, especially in the agriculture and electric public transportation sector. We seek to involve informal sector women micro-entrepreneurs, and organizations that represent them, in our product design and collaboration partnerships as much as possible. So far, we have deliberately only chosen to work with women-only microfinance organizations because we want to make sure our product is designed for women from the start. Our collaboration with one international financial institution is also only using their women entrepreneur loan product. We also work with organizations such as the electric minibus (safa tempo) association, where their members are majority women because the industry is mainly driven by women. In addition, our core team has been led by a majority of women from the start.

We connect borrowers, financial institutions (FIs), and vendors in a financial ecosystem, which is crucial to growing  a resilient grassroots economy and financial freedom for women. Our impacts are three-fold:

1. For micro-entrepreneurs: increased visibility, access more affordable financing, and build robust credit profiles, without needing mobile data

2. For the last-mile goods and services vendors: increased investment leading to more tailored local services for local customers

3. For FIs: increased data leads to de-risked loans, lower field monitoring costs and more compliance. 

In particular, we aim to foster 3 types of freedom for women entrepreneurs:

• From being trapped by financial credit histories and cultural norms of asset ownership

• From being pressured into sharing their business loans with family members for other purposes

• To create income-generating opportunities to suit their multitasking demands

We accelerate growing an inclusive economy by enabling access to affordable digital finance. A main problem is a lack of trust between: 1) those who want to invest to create impact and 2) those in the informal sector who cannot prove their business acumen through traditional credit assessments. Therefore, we use technology to foster a trustworthy transaction record and binding agreement by:

·         Ensuring funding is only used for business purposes; and

·         Monitoring behavioural data in real time. 

Through building a last-mile lender, borrower, and vendor ecosystem, we aim to become the premier investment platform for grassroots enterprises.

Piloting in 3 communities: 

1. First agriculture pilot: 18 women farmers borrowed US$11,000 worth of digital token loans, with financing provided by Laxmi Mahila Savings and Credit Cooperative with 5% of interest rates subsidized for 6 months by an INGO. The digital token loans were used at 25 approved vendors for seeds, fertilizers, and agriculture training. 

2. Second scaling pilot: we are currently targeting 100 agribusiness borrowers in Nuwakot district with Mahila Sahayatra Microfinance Bank. The first loans have been disbursed and we are discussing how to scale to other branches of this microfinance. 

3. Third electric minibus (known as safa tempos) pilot in Kathmandu: we have signed an MOU for US$300,000 in loans for lithium-ion batteries with Standard Chartered Bank and the safa tempo union. 

Due to covid related lockdowns, we have not been able to scale as expected.

Our digital tokens are a flexible type of digital cheque used within our ecosystem of accredited vendors. Similar to mobile money or digital wallets, digital tokens help users access goods or services without the direct use of cash. Unlike mobile money, tokens are kept within a network of vetted vendors. Microentrepreneurs receive digital token loans and can choose where, when, and how much to spend their loan. They are in control of their resources. 

Compared to traditional international development projects, we are ensuring impact finance is used to stimulate building sustainable local business ecosystems. Our model is less affected by project funding cycles or by change in political priorities. We can seamlessly combine public and private funds that are targeted at impact.

With Aeloi, the microfinance is assured the loan is used towards business expenses. We help solve the problem of trust between funders and borrowers. We have designed our business model and technology to have strong value propositions for each stakeholder.

For example, if the government is interested in subsidizing microfinance loans for no-till agriculture, using digital tokens, public funds can be combined with private sector credit to be channelled directly to specific entrepreneurs who meet the criteria. In addition, behavioural economic nudges can be built into the system. For example, women microentrepreneurs starting new businesses can receive bonus tokens if they are willing to participate in business skills training and receive a good score.

Currently, we have 2 products: ReGrow (agriculture) and Green Energy Mobility (electric minibus used for public transportation in Kathmandu). Through these 2 products, we are currently serving:

• Borrowers: 53

• Microfinance institution: 2

• Vendors: 37

In one year, we’ll be serving:

• Borrowers: 500

• Microfinance institutions: 3

• Vendors: 100

In 5 years, we’ll be serving:

• Borrowers: 20,000

• Microfinance institutions: 20

• Vendors: 5000

• Impact funders: 5

As each microenterprise employs between 1 to 10 employees, we estimate that our solution will help approximately 75,000 people indirectly through employment or vendor services.

We measure success by inclusivity and impact. Therefore, our key metrics will be 1) the number of microentrepreneurs we will help access financing and 2) the amount of additional financing available. Our secondary metrics include indicators such as increase in income, expansion of business size, and number of vendors onboarded. Previously, Tiffany worked in impact evaluation and understands the importance of using metrics that are easy to collect and provide insights for continued iteration.

In advance of our pilots, in terms of quantitative data, we conduct baseline surveys to collect information from our potential customers. After they have received their loans, we also conduct follow up endline surveys, so that we can compare the results from before and after. In terms of qualitative data, we often conduct focus groups and user testing to ensure we get good feedback on how to improve our product and our way of communication.

• 2 full time co-founders
• 3 full time managers
• 6 full team members
• 4 part time members of the development tea
• 1 part time team member

In addition, we work closely with mentors from, for example, UNCDF, UNEP, Standard Chartered Ventures, and Welthungerhilfe.

Aeloi’s co-founders, Tiffany Tong and Sonika Manandhar, bring a combined 20 years of fintech, international development and computer engineering experience. While working with the World Bank and the Microsoft Innovation Center, they graduated from the Singularity University Global Solutions Program based in Silicon Valley. Our front-end and back-end computer programming team with 4 members has more than 60 years of combined experience in financial technology software. 

Tiffany (CEO) is mainly in charge of business modelling, fundraising, and liaising with international stakeholders. In the last 11 years, Tiffany has implemented projects and statistical surveys totalling US$7 million in Africa for governments, NGOs, and the World Bank. She also co-founded a technology platform for job matching in Tanzania which raised US$175,000. The company was a finalist for Demo Africa 2014, Pivot East 2015, the ALN Ventures program 2015, and received an USAID seed grant. 

Sonika (CTO) manages our tech platform design and development and partnering with local organizations. Sonika has spent the last decade as a software engineer and project manager. She was also the CEO of a fintech platform and financial cooperative in Kathmandu. In addition, Sonika’s family has been working in the public transportation sector in Kathmandu for over 30 years, which significantly contributed to our company establishing our Green Energy Mobility product. Being the daughter of a former microentrepreneur, she understands how important it is to have affordable access to finance for the growth of small businesses.

Our company's approach to diversity, equity, and inclusion mirrors the clients we want to serve. We are committed to serving grassroots communities, especially younger women micro-entrepreneurs who have less credit history. Therefore we make sure our team is led by:

• a majority of women: more than 70% of managers are women

• a majority of youth: more than 15% of our team are under 35 years old

• a majority of local colleagues: less than 10% of our team is of non-local origin

In addition, we seek to involve informal sector women micro-entrepreneurs, and organizations that represent them, in our product design and collaboration partnerships as much as possible. So far, we have deliberately only chosen to work with women-only microfinance organizations because we want to make sure our product is designed for women from the start. Our collaboration with one international financial institution is also only using their women entrepreneur loan product. We also work with organizations such as the electric minibus (safa tempo) association, where their members are majority women because the industry is mainly driven by women.

Through Solve, we would like to gain inspiration, mentorship, and connections through your network. Being able to access mentorship and personalized support through your 9 month program would be tremendous support for our team. We would also like to increase our exposure and connections at social impact events and find collaboration opportunities through a class of unconventional Solvers and MIT’s extensive network. In particular, in preparation for our seed round of equity investment raising starting in one year, Solve’s network would provide invaluable introductions. 

To consistently improve Aeloi, we want to soak up strategic advice from your experts in order to test out in the field. In addition, we want to be able to showcase our improved product to investors and cross-sector leaders around the world so that we can gain partnerships and financial backing to scale our solution at the right stages.

As a young startup, all the above are areas where we are seeking advice and partnerships. In particular:

• Human Capital: we are in the process of setting up our board of directors and growing our network of advisors

• Business model: developing our pricing strategy and an irresistible pitch to microfinance institutions

• Financial: we are preparing for our first round of VC equity raise starting in one year

• Public Relations: in preparation for our first round of fundraising, we want to make sure we have a good brand represented globally

• Service Distribution: we’re looking at a reliable and enthusiastic microfinance or project partner for our first international expansion location.

• Investment funds that invest into microfinance institutions: e.g. BlueOrchard, Gojo.co, Accion

As large investment firms that invest into microfinance institutions around the world, we want to partner with them as a technology solutions provider to their microfinance institutions networks. 

• Leading microfinance core banking systems: e.g. Mifos, Temenos 

These software companies power thousands or millions of microfinance operations around the world. We want to partner with them and integrate with their software, so that it provides a very easy implementation experience for our potential financial institution customers.

• Global and regional microfinance institutions: e.g. Opportunity International, Grameen

We would like to become a technology provider for them and scale with them globally.

• Impact financing organizations for social entrepreneurs: e.g. Skoll Foundation, Schwab Foundation for Social Entrepreneurship, Acumen

As we are aiming to raise our first round of investments next year, we would like to be able to connect more with impact investors that might be interested in our company.

The fintech industry is often designed for men and adapted for women, as we have felt deeply in our previous work. It is also an industry which is biased towards privileged forms of education, asset ownership, and formal employment. As a company with female co-founders and a majority female team, we are especially driven to design first for women in informal sectors to increase economic equality. Specifically, we are piloting with women-only microfinance organizations and loan products before expansion. We have designed our training materials using videos so that low-literacy is welcomed. We strive to never cause any of our users embarrassment through difficult language, technology, or unfriendly staff. 

Using our platform, we aim to connect the 2 billion unbanked people through vendors who can access financial services. For example, we are currently exploring piloting a cash transfer program for those without ID and cannot open a bank account or digital wallet. With our system, they only need a phone number and then be able to spend their digital cash transfer at participating vendors. We help provide a first step into financial inclusion.

We have 2 goals: 1) providing additional incentives for specific groups of traditionally marginalized borrowers, for example, those from a lower caste, youth, or women, to access our product; and  2) further develop interactive training materials for any literacy level to make the application process completely words-free through audio and video recordings. Low literacy borrowers will not need to depend on a literate relative to help them.

Our vision is to become a pipeline for digital financial inclusion for microentrepreneurs building the grassroots economy. We work towards Sustainable Development Goals 1 (no poverty), 5 (gender equality), 8 (decent work and economic growth) by using technology to build trust in the financial inclusion sector. We also particularly chose the agriculture and electric public transportation sectors to start because they are two of the largest drivers of climate change adaptation and mitigation. 

We are currently moving into a blockchain to further secure our database. As our data grows, we will be using machine learning to draw behavioural insights that can improve our operations, increase alternative credit scores, and provide automated and tailored business support to grassroots entrepreneurs. This will help flag any problems or needs for improvement faster than traditional analysis. 

Smart contracts will also be used to ensure smooth implementation of reimbursements, incentives, subsidies or other types of program design. For example, if an impact funder wants to incentivize behaviours that encourage using agriculture insurance, the system can automatically reward users with vendor discounts when they have completed a number of monthly payments.

We have 2 goals: 1) developing, testing, and implementing our smart contract concept using an on-the-ground pilot by partnering with an impact funder; and 2) further research into methodologies for using our data to supplement alternative credit scores. We’re eager to partner with a financial institution that wants to use our data to provide affordable loans to new clients.