The beginning of a new year is often a good time to hit the pause button for a little while, and on the one hand evaluate the year that just went, and, on the other, look ahead at the year to come. So why not do exactly that?
A year ago, we listed three key challenges for 2011: funding, profitability, and risk (for the full blog post, see 2011 – Challenges and Opportunities). As any active MYC4 investor knows, we would clearly be fooling ourselves to say that we managed to fully solve those challenges: despite significant efforts and promising leads, no additional funding came in during the year; MYC4 is yet to reach break even; and currency risk hit investors particularly hard last year.
What we can say with full confidence though is that important progress was made. Similar to last year, funding for the rest of 2012, with the current staffing and at the current cost level, is in place which means that the going concern of the company is not an issue. With the reduced costs and slightly increased income, MYC4 is for the first time in a position where break even is in sight, albeit still distantly. Finally, the results of the improved risk management procedures and hiring of experienced staff in Kenya have started to show, e.g. in reduced loan defaults, better quality loan portfolio, implementation of risk sharing agreements with all providers, better managed partner exits, half-yearly spot checks, and annual reviews. These three challenges will remain at the core of our attention in 2012.
A key opportunity for 2012 is portfolio growth. We have spent the last 1-2 years on improving the MYC4 business model, our organisational capacity and procedures, as well as our local partner network, meaning that our focus has been on quality rather than growth. We feel that we are now ready to start growing again, and we are experiencing a pull from MFIs that are interested in joining the MYC4 platform. Rest assured, we will not forget our (tough) lessons learned: quality must always remain at the centre of attention, and we strive for controlled growth with good quality loan providers.
To grow the portfolio, we need more capital on the platform. We see great opportunities in attracting larger investors to the platform again, while of course continuing to make MYC4 an interesting vehicle for private investors as well as other sources of funding that can be channeled through the platform. To do so, we see value in e.g. improving the investor reporting tools and also in taking another close look at social impact.
We are excited to get going and we hope that you will all join us in the next phase of the MYC4 journey.