 Good afternoon everyone and good afternoon everyone online. We're also streaming this discussion today My name is Matt Bannick, and I'm the managing partner at the Amidiar network and The subject of our panel today is mobile and specifically mobile for development last year at SoCAP We at Amidiar Network introduced this paper called priming the pump At which point we talked about the importance of a sector-based approach to impact investing if I can see the slide please and we talked specifically about the importance of These three things investing in early-stage innovators who will help spark Creative innovations for a space the important in developing the infrastructure and ecosystems in which those entrepreneurs can thrive and the importance of engaging with policy makers to ensure that the policy environment is Promoting the sector development One of that we got great feedback on this last year at SoCAP and one of the primary pieces of feedback We got is hey, this is great And we understand how these various pieces fit together But please share with some share with us some concrete examples about how this actually works in the real world And so the session today, we're going to do this just that and specifically we're going to look at mobile and mobile for development in the context particularly of priming the pump and to do this I have three fabulous panelists I want you to welcome Monica Brandt who's a principal director of the frontiers investment group at Axiom Karina Gardner, who's the senior manager of mobile development at the GSMA and Faith Sedlin who's the COO of range networks And so yes, thank you And so before we dive in the panel discussion I want to give you a little bit of context around mobile generally and mobile for development now this first slide just simply maps the Adoption of mobile over time in both the developed world and in the developing world and these numbers Initially may come as a bit of a shock to many Because people are accustomed to seeing the numbers portrayed in terms of the number of sim cards and usage And what the GSMA has done is they've gone in and recognized that many people have multiple sim cards and particularly in the developing world people use multiple sim cards to get the Best deal from the network operators so GSMA went through a very rigorous process and they identified actually the number of subscribers of Mobile in each of the markets around the world and as you can see in the developed world 80% of individuals have mobile phone subscriptions Which is nearly a hundred percent adoption if you figure that there there are a lot of kids there and a lot of people who Who a few people still who don't have mobile phones? The contrast in the number for the developing world is a little more stunning for folks because I think we're used to hearing that Mobile has been adopted by 65 75 percent people in the developing world The reality is much different again if you take out the the multiple sim card usage in fact only about 40 percent of the Populous as of 2012 in the developing world Had a mobile phone account 40 percent now if you have One to the family of course a lot of additional people that have access to that phone And if you add that number in it maybe goes up to 50 or 55 percent of people in the developing world Who have access to a mobile phone, but I think that's much lower than people would assume and also by the way It represents a huge Urban rural divide right and and faith will speak to this a little bit So for example in Ghana there was 63 percent in the people in urban areas in Ghana who have a mobile Phone account and only 30 percent in rural areas, right? So that is one of the reasons that explains the division now if there's good news in here It's that we're already seeing such huge momentum in the developing world and mobile and we're still only 40% penetrated and we're adding probably another 120 20 million people to the networks each year By the way, I would note for those of you who think more broadly about development that this 40% or if you think about access 55 60% is a much higher percentage than people in the developing world who have access to a mobile phone Then have access to electricity or financial services or even basic sanitation so if we go from the overall adoption of Mobile and look at the adoption of mobile applications for development Also known as mobile for development or m4d You see a really interesting story and in one at one level. It's a very exciting story as you can see on the chart the the number of Applications mobile applications for development is really taking off you see in 2007. There were maybe about 40 The new m4d applications that were launched in 2011 there's well over 200 so very exciting and you see a particular concentration in mobile money mobile health agriculture education some some some really exciting progress some of the Most exciting progress in the realm is in the realm of mobile money So I think how many of you have heard of M-Pesa like everybody's heard the really exciting M-Pesa story Where a very high percentage of of Kenyon GDP is now actually going through M-Pesa, but the exciting thing about Mobile money is it's not just about M-Pesa anymore there are 251 and money deployments 41 were launched in 2012 alone and There are six mobile money deployments that have more than a million active users There's six mobile money deployments that have more than a million active users and a couple other fun facts over all There are 30 million active users at mobile money in the developing world and in June alone There are 224 million transactions and $4.6 billion of money moved through M money applications and June of 2012 alone and with 520,000 agents there are now more mobile money outlets than Western Union points of sale so Still nascent, but it's not just about M-Pesa anymore And one of the really exciting things about mobile money is it lays a foundation in which all these other M4d Development applications can really flourish because now people can pay for something And if you pay for something if a company can sell you something they then can develop a revenue model and Drive even more mobile for development applications And in fact we're seeing that the more robust the mobile mobile money platform is the more likely you are to see mobile for development applications Now the flip side of the story on mobile on mobile money is Outside of mobile money There are not a lot of m4d applications that are really taking off and that's going to be one of the subjects of today's panel So with that I would like to turn to our panelists and Ask them to speak a little bit about what they're seeing in the realm of Mobile and mobile for development and I want to again try and think about this in the context of our Framework and priming the pump which is talking about the importance of supporting early-stage innovators Supporting the development of infrastructure which allows a whole sector to move forward and the importance of thinking about policy and creating the right policy environment so Karina I'd like to start with you So what is the GSMA doing in terms of thinking about Engaging particularly in policy and infrastructure that is helping move forward the market for mobile for development Thanks. Thanks for having us here and thanks for taking on a topic that of course is incredibly close to our hearts at GSMA I Guess I'd start with a little bit about Where we within GSMA as the industry body that represents Mobile network operators and first and foremost their commercial interests Where we came to see a role for mobile for development and the role that we play in it from our point of view We were watching Amazing growth take place throughout the developing world a lot of money being invested in understanding how to engage a new customer segment Understanding how to create value and retention among those customers at the same time We were aware of a huge amount of money being invested by the international development community and looking at how to create value in people's lives and how to get Services and different educational products to these same populations and thought about where is the opportunity for us to understand How to influence these two huge bodies and these two huge groups that have lots of money being invested and who sometimes have very similar and goals even if they're motives and the The way that they go about meeting those goals is very different and that's where we kind of see the mobile for development space where is that overlap between an industry that's looking at a customer segment as well as a Huge amount of international development aid and work focused on that area The main way that we see this happening is through innovative models that are different than the way people have probably done business to date It's a different customer segment that you're trying to reach and therefore the model that you're going to use in order to get To them and also convince them that they want to have a meaningful relationship with your company and with the service You're providing is going to be a different way Because of that there are a lot of open questions and a lot of open questions that we're trying to help solve So, you know, just the shameless plug of course for the scaling mobile report that you'll find Sitting throughout on the seats or in the back of the room if you don't have one But this is our foundational research that is sort of the basis for understanding What are the barriers to actually having scalable models that are reaching many many people throughout the developing world and providing value to them? and how do we overcome those barriers and We have a few key themes that come out of this research and then we are continuing to create new analysis and research that Dives a bit deeper into these different areas But some of those themes are around financing around business models are around the mobile technology itself So we look really closely at what are the common? Barriers that are not specific to health are not specific to agriculture or any of the international development sectors But where when we're using a technology that's common across different sectors Can we also find common problems with the hopes of then also being able to find more easily reached common solutions? And one of those solution areas that we see as being key to this is understanding a new approach to partnerships in addition to new Business models new financing but often around both how do you create a new business model? How do you create a new service delivery mechanism is through a different way of looking at partnerships and who you're working with? So those are some of the key themes and there's a lot of information in this research. I would I Would actually advocate that nobody ever try and sit down and read it all at once Don't want anybody to be overwhelmed by the idea that there's a big thick book that maybe you know You have to find hours to get through even though actually I've seen evidence that Matt did just that but but it is actually Full of really easy to digest different analysis around in graphical representation around what the markets look like what we're learning what the trends are that we're seeing and The main reason for that is we want to drive the amount of investment in an innovation That's happening in this space and we think the best way we can do that is do some of the work for the different entrepreneurs that are trying to put together a business model trying to go raise capital and Also put do some of the work for the different investors that are trying to do their competitive Landscaping that are trying to understand what a good investment opportunity is and who they can compare it to and as you saw With the with the slide you showed earlier around the number of deployments that are being that are increasing year by year That's just a general tracker that we are crowdsourcing to understand the amount of different deployments in different sectors And it is growing exponentially. So our main hypothesis is that there's a huge amount of opportunity in this space We think it is only growing and that we will only see more success But the reality of it is that we actually have not seen a huge amount of individual successful models as you've seen And we're really trying to help understand how we're going to get over that tipping point and have more successful models That can be replicated And if and by the way, this is a this is a fabulous report It is really terrific and it's chock full of great analysis and terrific insight So if you were to summarize and there's a lot in here if I were to ask you put you on the spot and say, okay Karina a lot of stuff going on Outside of mobile money. We're we aren't really seeing the breakthroughs in terms of M4D deployments What are the two or three things in your opinion that are kind of holding that back keeping us from seeing kind of those breakthrough scale innovations In some ways, it's a matter of a definition of what is scale and so even understanding what that means, you know is Scale something that has a certain number of customers attached to it Or a certain revenue amount I think there's a very different view depending on who you are and who you're talking to about what that means to them I think from our point of view what we're looking for we're looking for viable Commercial models and so scale does not actually have to reach a number of customers What it has to do is it actually has to get you to the point where you are creating a revenue and able to cover your Business costs and reinvest in that business in order to continue going so depending on the margins and depending on the cost structure of your Business that could look very different for a different business model And and so I think some of the barriers are about understanding what our definition of success is It's also labels like mobile for development For some of the operators we talked to they'll tell us pretty honestly that they think mobile for development Services account for less than 1% of their bottom line Therefore not very interesting in other cases. We have operator in particular And Sri Lanka who actually the the mobile for development Head of mobile for development within their company They eliminated his position and they made him the head of business development because the truth is is that the new Opportunity for growth for the operator is to provide value-added services that people actually appreciate Almost all of those are what would qualify as mobile for development in our in our case And so it really varies depending on who you're talking to what the feasibility of all of this is great Thank you. Thank you in faith. Let's let's turn to you for a moment I'd love you to tell us a little bit about range networks I mean it seems as though the incredibly innovative work you do you're doing or has a potential to bridge this Urban rural divide and provide access to people who? Strictly on conventional commercial means would not necessarily be reached so love to tell you a little bit love to have you tell us a little bit about range and And and what what role range can play in? Bridge in the urban rural divide and more generally in mobile for development and by the way in full disclosure Meteor network as an investor in range networks, and we've also supported the GSMA in the past, so please Thank You Matt so Range network is going square into and attacking that problem of the three billion people who don't have not only access to cellular But any form of communication today no cell phone no landline no internet no nothing and they are mostly rural We We do this we build cellular infrastructure I won't geek out, but it's all that stuff that makes your cell phones work and One of the single biggest problems preventing you know m4d or anything cellular is the lack of access to cost effective infrastructure Today it costs about a quarter million to a half a million dollars to deploy a greenfield network to make the first call That's just the cat-backs, and then the op-ex no exceeds that so what you've got is this a situation of Carriers sitting on spectrum and not deploying so how do you change this? How do we do low-cost infrastructure by the way? Conventional infrastructure. It's not just the cost. It's difficult to use and there it's power hungry And anyone who's worked in developing countries knows that power and access to power is a huge gating getting factor as well Again, I don't want to geek out, but in short We flatten the core network. We have a network in a box that takes GSM and converts to void a Little bit geeky, but we basically make a your cell phone look like a sip end point so can talk to any IP network What this does is it dramatically reduces the cost we can set up and operate a System for twenty thousand dollars reducing cat-backs to tap-backs in order of one ten to one tenth of its Current cost small-roll communities and then op-ex we bring down to about one twentieth Still further our systems. I talked about power our smaller systems that have about two kilometer range They draw about 35 watts of power so less than a light bulb and then terms of usability We're based on open-source standards linux asterisk and then also an open-source community that we run and manage So we like to say our technologies future compatible We're not Investing in the dying breed of s of seven technologies. So by attacking all of those things You know we providing low-cost infrastructure, which you know without that there is no M4D. There is there are no mobile payments I Get an interesting question is this is working It's starting to work. I say starting to work the good news the great news is the technology works We do have successful deployments. I mean a couple of examples. We talked to talk Karina about How do you make the economics work and papua community is providing path profitable our poo at two fifty in that process it's funding a local school and the Ecosystem of reseller selling pokebuck at it in a small community and that by the way that community say small they're about 300 users maybe a thousand people in this small community in a small community outside of Oaxaca another example There was no phone service well There sort of was there was a phone booth where people can make calls the most common calls for to the U.S. For $1.20 a minute now they make those calls for two cents two cents a minute and local monthly service is $1.20 so Then you go, okay, so that's cool. I mean, I think it's cool. That's why I do this But why why aren't there more models like this? There there are some real barriers and You know unless we go and I'll speak to several but unless we go after these key constraints Unfortunately, we're gonna see growth and then it's just gonna stop in the develop That's my viewpoint. You know, there'll be 40% of the people in the world that remain uncovered So the the elephant in the room in terms of issues is access to spectrum Hands down we fix access to spectrum everything else. I'm gonna say follows including low-cost infrastructure But fundamentally you've got oligopolies in within countries between carriers and also in particular worldwide oligopolies on the NEP network of Whitman provider side And until you basically open up spectrum and allow for new entrance that Competition is not going to be there the good news is is there some you know There's some examples of models where that's happening for example instead of just having auctions You could have lotteries or do both at the same time parcel off a little piece of the spectrum and have a lottery That's how cellar in the US got started back in the 80s. It was a lottery. It wasn't a multi-billion play to play starting point Another interesting example is sub lysing so the Oaxaca community actually sub lysing spectrum from Telefonica And you know that they didn't take the telephonic isn't running around quite yet saying hey who wants to sub license our spectrum But there are ways we can talk about them that that's starting to happen and another another great examples or use it Or lose it policies so for example in the US there's something called the section to filing Most people don't know about it But if someone's sitting on spectrum you can petition get the right and the operator needs to respond I think it's within a deployment plan and start deploying within six months And if they don't someone else gets disturbed. So anyway, that's you know the big issue beyond that I also I also see Access to skills is a core issue. So when you're thinking about areas for investment in particular organizations NGOs or nonprofits or even universities that are training people in the new kind of technologies and Ultimately, you know as we see in some of our examples then training the local communities to take over ownership Because today most networks are They're actually run by the equipment providers in principle So not not even the carriers it carries out for some to the NEP. So that's a really cozy situation That needs to be broken up and the third the third big thing proprietary technology You got to get rid of that I mean sellers like the last industry I feel that doesn't have you know people aren't yet embracing open source technologies So range is we have a technology in a community called open BTS We're trying to be at the forehead of that and spinning spearheading that but in until we embrace Non-proprietary technologies learning and real growth and growth and interesting ideas I don't think we're really flourish so mouthful, but no Thank you for sharing. I mean it sounds like there are a whole host of policy issues and that you guys are also providing This critical piece of infrastructure for for particularly folks in rural areas and we are talking a little bit before the The panel but it maybe it's useful for the audience to put this in perspective with Traditional infrastructure that are put up by the network operators. What is kind of the and Karina? You're also making the point. It's got to make sense for the mobile operators, right? There's got to be commercially viable. What's the commercial kind of minimum sought population size to launch to have a commercial in terms of size of a town to have a commercially viable Offering for a carrier versus what have you taken it down to at range? Probably about 10 to 20,000 people and range, you know You've economics can start to work with 502 a thousand people. So think about that, right? So you've changed the economics to a point where you can only serve if you have a population of 10 to 20,000 or more Down to a population of a couple hundred and for those of you And I think there are many who have spent a lot of time in the developing world There's a significant rural population and currently there's just no Model that gives anybody incentive to serve them and serve them well and range is kind of changing that equation So critical piece of infrastructure. It also depends by the way I'm where that you know 10 to 20,000 hours the closer they are to an urban center the more likely they are to Be served because the rest of the core infrastructure is there So if you plonk a community of 10,000 people and it's actually far from paved roads or other things, that's a problem makes sense so Monica Monica has been an axiom for a while axiom many of you know had played a real leadership role in microfinance and For many many years and have now trained their their investment guns so to speak on really promoting entrepreneurship and innovation in emerging markets and My I've been really interested in your perspective as an investor right where you are investing in firms such as range that are doing innovative things Doing things that will have a significant social impact. What are some of the? Challenges that you're seeing in terms of those organizations thinking about how to develop a viable model to scale up We think about our investment thesis exactly that way in bottlenecks What are the challenges to greater scale for financial inclusion so the way we pick companies and support them is through a thesis So for example mobile and technology in general is a we believe will Dramatically disrupt how financial systems work today and we're investing in the technologies and business models. We think will catalyze New types of financial inclusion. So for us our portfolio companies. We don't just do mobile We look at both cloud computing big data Social media as basically all potential levers to change how financial systems work So thinking about mobile specifically we have a few portfolio companies and I think prime of the pump is a you know a great Really appropriate Framework for thinking about how we do it for example We believe one of the challenges of mobile money meaning why don't you see more impasse us is the infrastructure So in wonky terms, what's the acceptance environment? Where can I use my digital wallet to buy goods and services to pay bills basically do more than just top up my phone? And so we to one of our portfolio companies actually is building an infrastructure. It's called global cost and in Peru We have another one in Zambia called mobile transactions We branded Zona that we kill invested with a media network that basically is looking at the Acceptance environment the cash and cash out the distribution that is so critical for mobile Another example of sort of a breakthrough innovation, which we think will unlock some of this growth in mobile is Big data credit scoring so our portfolio company called Tiazza Basically provides real mobile loans over the mobile phone So moving beyond just transactions and say how can I deliver financial services over the phone using the data as the Real lever point so I analyze data and develop a credit score on the mobile phone user based on Utilization based on cost so all of our portfolio companies are responding to a thesis and they're you know We're basically making a bet on their scaling. Where is it? Where are they hitting trouble? One issue is actually just getting debt to leverage our equity. So both of those examples actually the three I just mentioned global cost net Tiazza and Zona We actually spent a good deal of time this year raising debt capital And these are companies that are EBITDA positive that have growing revenue And we can't get a bank loan and I think part of it is that the new business model is new to new for banks that are either Underrunning based on traditional criteria or they haven't been in the black long enough Another challenge, you know, certainly is the talent So how do you combine a mobile network operator talent with sort of credit scoring understanding? And basically operational blocking and tackling because a lot of our portfolio companies are actually doing customer acquisition And agent acquisition in the field so getting the right mix of talent that will and getting it fast enough to match the growth and demand So I would say those are the major challenges, but you know, but we actually see you know We've our all of our growth rates actually have surpassed what we expected We see there's a big unmet demand for both mobile financial services and some of the ways mobile financial services can be applied everything from bill pay to Loans and savings so that it's really interesting to watch how they are diversified beyond the initial business model So very helpful and it's you guys for for for any of you as you think so a lot of great examples a lot of rich examples in there a Lot of generic issues around policy and infrastructure and types of capital and talent Be really interesting and I put you on the spot again faith or maybe you Monica But I'll I'll leave it open be great to have a specific example of a company And all the that what what you see is because it sounds like it's just a lot of pain points coming out huge opportunity But a lot of pain points side a specific investment and again faith can talk a little bit more in your context But what what specific things in the company's as progression or though are the biggest problem area? So I'll give you another example. So in one of our portfolio companies Actually, it's it's operating Basically in the space of mobile network operators and mobile network operators can be a partner But they can and so most of our portfolio companies look at them as a potential customer But there are efforts to I would call disintermediate So there are aggregators that are coming to bear either to aggregate utilities and bill payments There are aggregators coming together to help build agent networks And some are trying to say is there a way I can go directly to the end customer? So disintermediation I'm in people believing that oh, it's not so hard to do I can do it myself And what happens is they try that there are a lot of money at it and they fail and attract but in the time Leave a lot of collateral damage. So one of the challenges is really to anticipate Where did happen you create a win for the mobile network operators the other and the other partners so that they avoid You know trying to do it themselves Ken is a great example you see and and Pessa coming in disaggregating some of the intermediaries And it's a question on how sustainable that model is versus building an ecosystem of you know Here are the payment aggregators here the mobile wallets Here's the mobile network operators and creating a more healthier ecosystem where the pie is bigger versus going after a bigger Slice for each piece so part of that is in a part of that is supporting the company We actually spent a lot of time talking to network industry players and sort of explaining what the role of our company is and how They can help build make the pie bigger and so a lot of the specific challenges are around for example in Zambia How do they work with Airtel you know how does owner work with Airtel so they're not competing But actually creating a healthier ecosystem so that your Airtel wallet can work with Zona and vice versa So there's a lot of ways in which we are trying to have people take more of an ecosystem approach versus say how can I cut up the biggest slice for myself Thank you, and There's another thing another thing interesting that was in the report the wonderful GSMA report You guys talk about the need for early-stage investment and and and the the dearth of early-stage investment and Again with the panel here you guys are very well Positioned I think to talk about this both as a fundraiser as a as an investor and GSMA having the broad perspective on the industry What's going on with that right? Well, why is there you look at the the the headlines about something like M-Pesa and you say oh My gosh, wouldn't people be flocking in there on the other hand these are very complicated environments as we've been discussing so Karina talk to us a little bit if you if you may about kind of the next level underneath What's in the report here? Why is there this dearth of early-stage investment and what can be done about it? I'd be interested in perspectives you to bring to bear on that as well Yeah, great. We're actually in the process of putting together a sort of follow-on report right now about Either financing innovation or innovative financing models kind of depending, you know playing with the title but It's really around this basis that you know again one of the things that's interesting about the mobile for development space is you Bring people together from really different backgrounds, especially on the financial side So you might bring people who have more of a technology investment or a Silicon Valley background Who are suddenly interested in markets that they haven't traditionally looked at in the past? and and looking at an opportunity to use their experience from Being a technology VC or you know some of their traditional technology investor role in this new space that shows a lot of potential and growth but surprised when they get there about how different they Business models look the way the deals are going to be structured a lot of things that are different and at the same time you have the more traditional what might be now called the impact investor space, but it could be you know a Foreign aid agency or some of the big foundations or any of the traditional donors that come into this space Who are interested again in the potential that this you know mobile for development sector poses to them, but the This structure of a technology based product or service is very different than what a donor has typically given money for in the past And so you have this convergence of very different Experiences and a very different point of view about about the expectations when they come and then on the entrepreneur side You have a really big dilemma about how do you? Position yourself and what's the better way to what's the better bet? You know because sometimes it's almost impossible to deal with money from both of those Parties at the same time Which one is more likely to be the better partner long term where you more likely to get better? Capability support for you know capabilities. You're lacking And those are some of the areas that we're looking at we notice that there's a few places where there's really Contradictory ideas from those two different investor sets, you know which include how the business should be structured and how asset heavy It is versus how IP based it is What are the possibilities for exit of course the traditional ones that are always talked about an impact investing around is sort of ROI and the speed with which it's going to be achieved But I think it's interesting because it's a slightly different conversation when you have this space under technology Where there's a different convergence of those two different finance or personas? I do think that one of the things that's interesting about this place you were talking a little bit about the About sort of the policy barriers and even the example of spectrum being you know a great example of policy Very I think one of the things for me that's most interesting about About mobile is not mobile itself I mean mobile itself is an amazing technology that you know has changed all of our lives in one way or another But in terms of delivering services to hard to reach vulnerable populations What's actually interesting is that it's Innovative changes in the processes by which we do things and mobile happens to be a key enabler That actually provides us a whole new set of changes to processes But in the end it's actually innovative changes to the process not not just a technology. That's the answer So you know again spectrum allocation, you know We do have an entire regulatory department at GSMA that tries to work with getting you know more fair access to spectrum And that is one effort but probably where you'll see the most strides is people finding innovative ways around it as opposed to Well, there is one body that works on changing policy and changing the regulatory environment There's also other companies that are going out there and finding new ways to work around them And that's where you have a growing mobile virtual network operator kind of group that are getting sub licenses that are doing things in a different way Similarly with you know the conversations We've had around mobile money and having a payment system in place being a key enabler to getting services out in many different other ways But there's also a lot of regulatory environments that are a little bit rough and and are not as conducive to deploying mobile money Platforms and I think that we're seeing more and more ways around that as well both in actually mobile money deployment so again one of the Some of the case studies that the mobile money for the end-bank team has come out just within the last month are for Sprinter successful programs in Pakistan and Zimbabwe and in Somaliland So these are not the markets that people typically think of as being the most friendly easy place to do business But yet you're seeing them as you know some of the few deployments in the world that are actually showing commercial success At the same time there's you know micro insurance Which is you know one of a media as grantees where they're managing to figure out how to provide micro insurance Solutions where there is no payment platform using different things And so I think I think that innovative workaround kind of or thinking about models and processes in a different way is actually What is so exciting about the space? And that's the real key in this space is mobiles allowed people to start thinking about how doing processes differently Yeah, it's interesting when we have this discussion around investments and early-stage investments Part of the refrain is you talk to the entrepreneurs and they saw there's there's not enough capital There's not enough investors who write really get it right and you talk to the investors and you say well There's just not a lot of deal flow. We have this back and forth. So fate. How was it for you? raising money was it fun? Do you find are there enough people that quote get it that understand the model and are willing to step forward and take appropriate risk Well, no in short And as backdrop I've raised capital successfully for several different kind of companies And so in this particular space it is harder Syria is a company in Oodle and even way back when eBay so Why why is it hard and what's it like? Monica you talked about you talked about roadkill or collateral damage a lot of people have lost in traditional investment Social investment traditional they've lost a lot of money and wires and recently And so they've either laid off their partner specializing or they go. Oh, I think they're done that not doing it again So that's probably the single biggest you talked about spectrum issues, but you know Regulatory I don't want to invest in things that have exogenous factors and then you know the third thing And this is particularly Ramsey. Oh, and we're going after developing countries They go that sounds hard The last the last thing and this is now I'm going to speak to when you're I'm speaking more again to a traditional You know investor it's opportunity for that investor It's opportunity cost of time and they're looking at their ROI over time and you spoke a little bit about that But when you think you're looking at the next Facebook or Groupon well Groupon's kind of done this But you know those businesses appear to have less friction than you know something like cellular infrastructure, so People get that it's a big market They get if you can pull this off, it's huge and the great news is there aren't a lot of people chasing it The deal flow question, but you got to get as a traditional investor. You got a hop a few hurdles to get there And how do you see them on I guess there are shortage of investors or a shortage of Deal flow and what's the interplay between the two I would say what for me I see in mismatch and actually it's why Aksan created venture lab from frontiers in spirit So frontier is trying to be a commercial fund and actually attract investors that have a lot of the fears that you just described And so we have to be very focused. We're very focused on an investment thesis We're very focused on criteria, so we don't do proof of concept. We do growth stage So we have to have a million in revenue We have to see a growth trajectory and a path to exit to Karina's point But there are a lot of fantastic companies that are at the proof of concept stage and actually might be phenomenal business models So Aksan credit venture lab, which basically does the startup stage and it actually is on Aksan's balance sheets So rather than say we think about we think we are building a commercial impact investing world We know that might need to start with a subsidized Non-profit fund that does the proof of concept that takes because we're let's face it these business models don't exist We don't have a mobile banking other than Pesta enough that says this is a replicable model like microfinance where you can Show it over and over and over again We believe they're out there And so we just need to take risks that if there's not enough private capital because there's an information of symmetry or Overweighting of the risk so we do it with our subsidized fund those as we see successes frontier helps Commercialize it and hopefully 10 more like frontier just the way there are 10 microfinance investment vehicles today Many of them doing this at scale Thank you And with that I would like to turn to the audience See if there are any questions here. I suspect we have a roving mic. Yes, at least one roving mic This is your opportunity to engage with the panelists here any questions in the audience I was gonna say I've never had a cold call at one of these panels before I Will do so if necessary There's several big telecommunications company the biggest the three biggest one has agreed to work together to have Mobile fans for payment like and PESA, but there's nothing really so far in implementation and I guess Delivery for that for an information delivery for people in the more rural areas What I guess are some of the challenges in creating Replicating an M-Pesa style Program in other countries Would you guys able to hear that well enough? Yeah? So yeah, the question being sort of what are the main challenges to having a successful mobile money? Replicating the M-Pesa model so I guess The first thing that I would say is I'd kind of like to Fight against the idea that there is a model that can be replicated and I think that's one of the things that's gone on and on for For many years people studying in Pesa very closely and understanding what they did right and then trying to figure out How to apply that to other places? But again just referring back to the case studies that were just published around Somaliland Pakistan and Zimbabwe One of the things that's really interesting about those is that they're very different models and there are different models that are looking at the local context whether That be you know the specific regulatory environment that they're dealing with the different cultural norms and what are going to be the barriers of Adoption and the behaviors of the culture that you're dealing with different payment systems and And even you know different models and how they're doing transactions and how the cash-in cash-out goes So I think one of the things that that possibly has been a little bit difficult is Is people looking for a formula for success in this space? and there's not necessarily a formula for success, but I think there is definitely an opportunity for Mobile money growth is is the growth rate is even increasing and speeding up and Definitely you'll see it happening. You mentioned a bit about interoperability And of course we we think about interoperability in a couple different ways you were talking about it between operators And there's different points of view and I think it depends on the market as well Whether or not that's actually the key to making things work, but there's also the interoperability with other sectors And I think you know mobile money is one of the areas but in all of mobile for development one of the things That's very interesting kind of you know goes back to the earlier point. I made about partnerships being a key is that Mobile for development is or or either just mobile value-added services tend to sit in between different sectors or in between different industries Well mobile is an industry within itself It completely rides off the back of different communication needs among all the other industries And that's what starts to happen. And so in places where you actually start looking at where is the opportunity to leverage the Different communication platform of mobile through different industries. That's where the kind of creative partnerships start to happen. I Would just add that in a mid-air network by the way as it has invested in mobile money organizations in in Zambia and Nigeria and Indonesia and I think it's true that there is no one-size-fits-all That said there are several parameters are really really important, right? First of all, there's got to be a killer app There's got to be a strong use case. You can't just invent something There's got to be an underlying demand for that service and with him pace of what they found is people Who were going to work in the cities wanted a cheap cheap secure? Transparent way to send money back to their their families in the village and that was the killer app by the way and Paisa started out there was a grant from DFID and started out as a An application that would enable people to pay their micro finance loans Right and it morphed into something very different based on user demand and what was actually driving utility So having a killer application or killer use is I think really really important getting distribution, right? Right ultimately, you need a vibrant a strong vibrant distribution channel to get enough kind of touch points with the customers so that you can get the volume to make the model work a Third point here. I think it's really important is that you have to have Strong financial incentives every step of the chain right going from from the MNO's to whoever's actually doing the point of sale to Whoever's registering the customers you've got to have each point in the chain has to have an economic incentive to perform and to perform Well, and finally I would cite regulation a Lot of countries are justifiably concerned about movements of movements of money There's also a lot of vested interest in banks typically that are quite ambivalent about hostile to the emergence of mobile money So get it getting regulation right there has to be some regulation but getting things like Sending amounts right and know your customer state rate you know your customer regulations those things right is extremely important So there's no one-size-fits-all, but there's you know four or five key elements I think every successful successful model has to bear in mind This is a question for hi. My name is Lou This is a question for both the investor side as also for GSMA. Are you finding that applications like mobile money? and the viability of the mobile platform is Making way or a carbonic path for viability of other applications just because you have pure platform good example is I'm working in three countries with about five hundred thousand and and users in a mobile platform on language learning So are you seeing that? Specific applications like mobile money are driving the use of driving demand for other apps that make it more commercially viable This is one of my favorite themes by the way, but I'll let I'll let the other panelists chime in here first I'm happy to go first Absolutely the answer is yes, and actually it's actually in those synergies that we see The business model the use case for really scale so example and zona it basically is using what was Basically a money transfer platform to now digitize the retail value chain So it's gone to coca-cola and beverage distributors and said its pain point is just a basic delivery of inventory So here's a truck that goes into the village rural areas has to restock So so right now what happens is the shopkeeper will wait for the coca-cola or just or beverage to Run down calling the order wait for the truck the truck can only economically come a certain day of the week And so you have a time lag your sales cycle is slow What if you can one have the knowledge of the inventory going down happen electronically because you're capturing payments So just like Walmart knows immediately what its inventory is how this small mom-and-pop shop can know automatically its inventory It can deliver that message to the distributor who already knows that actually I can increase my route because now I can Justify from a cost base and then finally all the slippage that happened when that truck carried cash back and forth Disappears so I'm creating huge value think about dividing your sales cycle by three I mean the economic bottom line, which is why the distributors paying for that service So again back who pays an ability to pay, you know charge the poor person You know who might be least able to pay for that inventory system You actually find who's getting value along the value chain and say how can I share in the contribution to it? I mean the micro insurance is another great example, so you're seeing all these business models being enabled by them all money Do you want to say anything? Yeah, I mean I would just say you know from a sort of analysis point of view We do actually just you know kind of looked in we see a direct correlation between where there are mobile money deployments that are fairly Active and healthy and how many other mobile for development services in other sectors such as health and agriculture and you know All kinds of other areas are growing out of that What's interesting though is I think we really see a big difference in how mature that mobile money Platform is so the really big outliers of course would be places like Uganda Tanzania and Kenya that have more mature Established payment systems It's not as easy as we get mobile money rolled out and suddenly a whole bunch of services get layered on its rails the next You know a few months per year or anything like that So I think just being cautious about what's realistic there there needs to be a real effort put into That payment system being used as the way people do a whole lot of what they do in life And there's a whole behavior change Process that has to take place where people become comfortable and trust that as a way of managing their money And then you start being able to usher in other services You know and notwithstanding Karina is appropriately a cautionary note. This is one of those areas I get really excited about I think that mobile money is the closest thing to kind of a railroad like infrastructure for mobile for development, and I mean that in the context of the role that the creation of the railroads played in broader economic development in society and by the way I Personally quite intrigued by this because I used to run PayPal in one of my previous lives And when and I was at eBay and when eBay acquired PayPal you could see how the introduction of a more efficient Payment system actually accelerated the development of eBay and accelerated the broader development of e-commerce in the in the States And the anecdotal evidence in the developing world is also quite compelling yet one of the organizations Companies we support is called bridge international academies and they're delivering low-cost education To the base of the pyramid in Africa and Kenya specifically tuition about $7 a month At performance academic performance going through the roof and if you ask Jay Kimmelman who's the founder and CEO What's the most significant innovation in his business model in the last few years? He'll readily cite and pace on mobile payments because he has gone completely cashless Right, so he's serving a base of pyramid customer base and all of their tuition payments are an impasse and this not only eliminates Leakage shall we say? Creates greater transparency. He now knows through the payment mechanism who's showing up school when and a whole host of things that then help him enhance his business and GSMA is doing some really interesting work on seeing the correlation between mobile money deployments and mobile for Development activity and so I think it's just incredibly exciting and if we can accelerate mobile development I think that's the development of of Mobile money. I think that's one of the best things we can do for accelerating the development of mobile for development more generally We have time question. We have time for one final probably fairly quick question Not hi. I'm everyone from South Africa Quickly, I just wanted to talk about talked about the benefits of mobile money But what about some of the negative? You know more people having access more people Transacting in this way. What are the checks and balances we can put in place to stop abuse of these systems? Which I've seen a bit of in some developing countries are there particular abuses of the system that well, I mean I mean in terms of access for example in Brazil I saw a lot of networks or unscrupulous parties kind of targeting low-income group people with messages and Scams and you know things like that and also in terms of Mobile payment I saw groups of people who weren't really educated in how to use that money on how to Conduct their affairs in that way, you know, so they've been they've been bartering and working locally suddenly they've got access to to a payment mechanism and Obviously they could that opens up a whole can of worms reading and if you want to respond to that I Mean in general I would say this is you know, it's absolutely a reality of the vulnerability of mobile money But that's actually a vulnerability of everything. There were scams happening in cash. There are scams happening on the internet There's scams happening, you know with every new technology or every new communication mode and Education around financial education for whether it doesn't even have to be as Nefarious as somebody out to get you or anybody, you know trying to pass on their inheritance or things like that But it can be you know, just as simple as a suddenly very easy to use platform that without the right amount of support and education around how to manage finances within itself can be a little bit Irresponsible and and I think there's been a huge amount of growth in the number of groups that are working on Not just the idea of financial education, but actually how to embed that in a user-friendly way in your mobile device and actually, you know interesting different ways of How people think about money and understanding your end user is actually you know another area that we focus on sort of one of our Four key themes within scaling mobile is user centric design and really understanding your end user and not having this sort of top-down approach to what is the best thing that we can provide and I think you know Fundamo has a great story as one of the you know major, you know, South African platform providers for for mobile money and Realizing that the language or the words that we would use typically don't Resonate the same with a lot of the end users. They were targeting the word savings Well, if you have an entire cultural context where people say we're not of an economic class that saves That's a luxury. We don't have however They do put aside money for a wedding fund for a funeral fund for all of Education all of these different pockets of money. They don't think of it as savings. Those are necessities. That's money That's put aside for that thing But it's just completely different about how you approach the user So I think I think there's a lot to do from the very far end of understanding how to Mitigate against you know abuse as you've mentioned But there's also just a lot being done in really interesting innovative ways around how to provide basic education Alongside these services and I think understanding the end user in the design process at the beginning of when you're putting these things together Is one of the key ways to ensure that you do it in a responsible manner? I do think you raise a really important point regulation Education are really important and some of the more enlightened business people aren't the ones who say well I want no regulation and let me take you know Let me I'll do my my the customer will figure it out over time that doesn't always work and Potentially invites bad consequences and even a backlash. We don't have to go very far You know in the United States, you know the financial meltdown that we experienced several years ago Was in part due to inappropriate regulation and and lack of education as to actually what was Happening for example with with mortgages and some of those provisions So I think I think that is a an additional cautionary important cautionary note that you raise and there's also by the way in Monic with your with your deep experience of microfinance one of the challenges of microfinance in India There was a major disruption in the growth of microfinance in India That was in part due to perceptions around lack of consumer education and inappropriate regulation So even as we get really enthusiastic about these scalable business models We need to understand the broader context in which these organizations are operating and be sensitive to some of the some of the pitfalls That might be out there So with that I think we should wrap up again I want to I want to thank my our panelists here for a very engaging conversation and thank you all for Attending as well. Thank you very much