Ram and Smita on RangDe

In the year 2004, we got married. Like all young couples, we too had a dream for our future. The dream was off beat. We wanted to get into the social space on a full time basis. A few months down the line, we had flown off to United Kingdom for our professional commitments. Our families who had an inkling of our off beat dreams sighed a sense of relief as they thought the dream was bound to change.

After the initial time taken to settle down in the new country, we would occasionally talk about our plans. Our first question was what would have that single biggest impact on a country like India where we were dealing with so many problems.

From then on, our weekends were mostly spent in brainstorming and talking about ideas. Since time was not a constraint, we had the complete creative freedom to think and even write business plans. Our ideas ranged from setting up a day care for construction workers to upgrading skills of domestic help by sensitizing employers to ethical housekeeping.

The turning point of our lives was the year 2006 when Muhammed Yunus won the Nobel Prize for his work with Grameen Bank. For the first time ever, we came across microcredit and still wanted to read up about it from a Bangladesh perspective. We were of the impression that India does not need microcredit as it was more developed than Bangladesh.

A little bit of research on Google dispelled our ignorance about microcredit. There was already a growing industry of microfinance in India and there were at least a 100 microfinance institutions that were working in India. We were intrigued to learn that the industry was unregulated and the interest rates varied from 28% – 50% APR. It was a bit shocking that the poor indeed pay rich interest rates. We stumbled upon an article that was published in 2004 in rediff.com about borrowers from an MFI committing suicide due to their inability to repay the loan. The industry was also boasting of its high repayment rates of near 100%.

We were faced with a paradox here. For people who maintained near 100% repayment rates, the interest rates were as high as 50%. The justification given by MFIs was that the interest rates were less than that of the money lender.

That’s where we saw an opportunity. If microcredit can be a life changing tool and it could give someone a realistic chance to get out of poverty, it should be provided at affordable interest rates. Microcredit seemed to address all the criteria we had set for our social enterprise – that it could hit the nail on its head. And it had the potential to scale.

Since the cost to the borrower had two components – cost of capital and cost of operations, we decided to explore different ways in which cost of capital could be reduced.

On the other side of the problem were individuals like us who wanted to give back but were looking for the right platforms. To these individuals, it was the social return that mattered and not the financial return.

Rang De was thus born as an online platform that will connect individual philanthropists to low income entrepreneurs across India. The social capital raised through this model would ensure that entrepreneurs get access to low cost working capital at interest rates that were unheard of in the industry.

Rang De went through its own share of challenges from the inception of the idea to going live. Both of us were first time entrepreneurs. We were high on passion and knew what we wanted to do but did not have a backing of a funding organization or a team that would help us execute.

We solved the funding problem quite easily by deciding to invest our own savings. That decision of funding was liberating. It suddenly gave us the bandwidth to focus on execution rather than go after funding. The next big hurdle was getting a small team to work for us. We took it up on ourselves the responsibility of setting up the operations and were on the lookout for a technology start up and a creative agency. After many unsuccessful calls and contacts with people in India, we finally managed to sign up with a technology startup and a creative agency to work for us. We believe, this would not have happened had it not been for what we call ‘divine intervention.’

From then on, we have firmly believed that if we go all out with our passion and give it our all, the universe does play a role in making things happen.

Having sorted the team out, we were looking for an appropriate launch pad for Rang De. Then again, opportunity came knocking on our door when we heard that registrations were open for the Microfinance India Summit in October 2007. There was an opportunity for a roadshow which we thought would be the perfect launch pad to announce to the world that Rang De was coming soon!

The event indeed proved to be the perfect launch pad for Rang De. Even though we had nothing to show on the ground, it gave us the opportunity to pitch our idea to people from the industry.

From then on, there has been no looking back for Rang De. We have had our share of ups and downs but we have managed to overcome the challenges.

Rang De went live on 26th January 2008 and subsequently got funded by ICICI Foundation.

My Notes:

What I observed more than anything is the power of two aligned minds coming together for a cause.