Interview with entrepreneur Ananya Birla.
Please tell us about yourself:
I am an entrepreneur and singer-songwriter. My start-up journey began at age 17. I was keen to enable and empower other women in my home country of India to be self-sustainable and fulfil their potential as businesspeople. So I founded my first company Svatantra, a microfinance institution that provides loans to low-income, rural women to help them grow their businesses.
Since then, I have launched CuroCarte, an inventory based e-commerce model which provides a retail platform for artisans from all corners of the globe who are fighting to keep their ancestral arts and crafts alive. And MPower, an initiative which aims to stamp out the stigma around mental health in India both by campaigning and providing care. Each of my businesses are borne of a personal passion, from empowering women, to a love of hand crafted homewares which remind me of my travels. Life is too short for people not to follow their passions and I recently followed mine into music, signing with Universal last year. I have just released my second single, so my focus is turning to collaborating with producers in the US, Europe and India to create my first album. – Ananya Birla, the entrepreneur behind Svatantra Microfinance.
What inspired you to start Svatantra?
Ananya Birla: A variety of experiences inspired me to start Svatantra, both personal and professional. I have always been very conscious of the huge income gap in India, and I wanted to develop a vehicle that could address this, to give back to society but in a sustainable way.I think it’s more valuable to teach or empower someone to do something for themselves than to do it for them on an ongoing basis. Microfinance seemed to fit the bill perfectly because it was a business with a heart.
For me, it’s not just about capital, but sociocultural development.I wanted to empower other female entrepreneurs, in particular because traditionally Indian women were expected to stay at home and take care of the family thereby severely limiting their participation in the economy and ability to be financially independent. Increasingly, women are making their presence felt in India’s vibrant economy; Svatantra supports that by providing loans to female entrepreneurs to expand their businesses.
What makes this particular concept different? Are there competitors? If yes, how do you stand out?
Ananya Birla: Svatantra is one of the newer microfinance organizations. We stand out because we have different technology, we offer one of the lowest interest rates in the entire industry, and we are completely cashless; which no other MFI in India has been able to do. From disbursements to collections, no cash exchanges hands at all. This reduces the chance of theft and also supports financial literacy and inclusion into the banking sector .Our client touch points are extremely robust and we have many loan utilization checks which differentiate us very much from our competitors. This assists us in monitoring the use of the funds, enhancing our relationships with the clients and enables us to help them grow their businesses.
We have reached a stage where Svatantra is moving more towards the FinTech space because of our pioneering technology that our competitors don’t have. In our mobile app our field officers can monitor exactly what is going on, right from identifying potential locations for expansion to customer details to conducting loan disbursements and actual collections. It heavily de-risks the organization by ensuring real time data at the headquarters, and reduces the overall turnaround time. It has helped us increase our yield as well.
We lend based on social collateral which means that each woman takes guarantee for another, so the loanees are put into groups whilst the loans are meted out individually. If one woman defaults, then the other women have to pitch in and cover for her, which has really worked for us. We’ve found it’s not necessary to rely on a formal guarantee; the importance of social status in the regions where we operate has proved encouragement enough.
What is the revenue model?
Ananya Birla: We have established a very good reputation in the industry. We are the fastest growing microfinance institution in the medium segment, and we have a very clean book. The money that is given to us by the banks is at very low rates compared to other microfinance institutionsand, as a result the interest spread is quite high. We have other product lines that we have established as well. While this is the basic revenue model, sustainability is as important as profitability for us.
How long did it take for you to become profitable?
Ananya Birla: It took three and a half years for us to become profitable. This was because I initially cut the entire industry interest rate by 6.5%. I knew we would take a hit on our profitability, but it was very important for client satisfaction and loyalty. I wanted our clients to be with us not just for one loan cycle, but for one, two, three, four, or five. Our strong client relationships have helped grow our portfolio in a very sustainable and clean manner. Now, we are profitable and very positive about the future.
What challenges did you face when you were starting out?
Ananya Birla: When I started at 17, the industry was male dominated and the leaders were middle aged and very established, my team was also much older than me. That posed challenges, it was tough to prove to everyone that I knew what I was doing and that I had a strong enough vision to see this through. I had to reinvent myself on a daily business, I had to continue to learn, to make my own mistakes and continue to move myself and the organization forward.
When you were starting out, was there ever a time you doubted it would work? If so, how did you handle that?
Ananya Birla: I never doubted the vision that I had or I have. I knew thebusiness model and processes were very strong, but it took some time for that to fall into place for a number of reasons. Primarily, the Indian landscape can be very challenging for Microfinance companies. Were it not for the support of my team and those close to me, it would have been a lot more challenging.
How did you get your first customer?
Ananya Birla: I remember going into a village far out in rural India and personally convincing a young beautician, who was looking to expand her business, of the value propositions that we had to offer compared to other competitors. We are still in touch, she has since employed more people in her parlour, enabling her to fund her daughters’ lawdegree.
What is one marketing strategy (other than referrals) that you’re using that works really well to generate new business?
Ananya Birla: Because the mindset of our clients (who reside in rural areas)is so different from the urban mindset, it’s very important for them to feel connected to us. We have to speak their language, understand their needs in detail, and spend time with them. We have to show them that we genuinely care. More so than external marketing strategies, we concentrate on building one-on-one relationships and this is what has really helped us generate new business. If we have seen a woman who has successfully taken a loan from us and created a successful change in her business and increase in her income, then we use her as a model. We request that she comes with us to show other new clients how Svantantrahas helped her. Since these women often comes from the same area, it’s easy for the new potential clients to understand the impact we can make in their lives. Theyhave a role model right in front of them who is from their peer group.
What is the toughest decision you’ve had to make in the last few months?
Ananya Birla: The toughest decisions for me are to do with people. I build strong relationships with my teams, particularly those who joined at the start, but as a business grows, certain changes need to be made.
In the past few months, having less of a hands-on role has been my biggest challenge. Initially it was very tough for me to delegate my work, but now I have the right teams in place so that I can take a more strategic role.
What do you think it is that makes you successful?
Ananya Birla: It is very important to have strong morals and values and to stick by them, and to surround yourself with a team who also believes in your vision. I never give up, my career is my number one priority and I have had to make compromises in order to reach this point.
What has been your most satisfying moment in business?
Ananya Birla: When I hear about the successes of my clients. They regularly keep in touch and tell us about how much our loans have impacted them which is incredibly rewarding.
What does the future hold for your business? What are you most excited about?
Ananya Birla: I want to continue to expand, not just in India but internationally too. I believe we’ve built a very robust business model that can impact many people’s lives.
What business books have inspired you?
Ananya Birla: I am inspired by any books on successful businesses and successful leaders. However, I think the books that help me the most are the ones that teach me how I can become a better person, a better leader and in turn to do what I love to do because I love to do it, rather than for what it can give me. Other than books, I find TED talks really inspiring. Simon Sinek is someone I really admire.
What is a recent purchase you have made that’s helped with your business?
Ananya Birla: I’ve started using App Box recently. It really helps me while travelling.
Do you have any advice you want to share with an aspiring entrepreneur?
Ananya Birla: Be confident in yourself and do not give up – Don’t be scared to dream big, if your dreams don’t scare you then they aren’t big enough.
Plans for the remainder of 2017:
Ananya Birla: I will continue to split my time between my businesses and music, I am currently recording my third single which is very exciting and I’m also increasingly speaking at events such as the Women EO Summit, the Economist Summit and One Young World. These give me the opportunity to connect with other entrepreneurs and share my vision; connecting with communities and learning from others is incredibly valuable.