The initiative aims to raise micro-entrepreneurs from low socio-economic classes for sustainable change
Created in 2013, Seed Out is Pakistan’s first online crowd-funding platform. The project aims to help raise micro-entrepreneurs from humble socio-economic backgrounds. The project, led by Zain Ashraf Mughal, works by allowing people to donate money via its website to various small and local businesses. Instead of making payments directly to the businesses, Seed Out collects the money and provides micro-entrepreneurs or businessmen with essentials or tools needed to kick-start their businesses.
Mughal recalls that as a young boy while returning from school, he would often come across poor, disadvantaged women sitting along roadsides. “Speaking to these women was life-changing for me,” he says. Their stories were what motivated him to want to make a difference. Moreover, he explains how frustrated he was with the micro-financing models prevalent in Pakistan. “You get charged 30 percent interest making your debt double of what it initially would have been.”
Seed Out’s objective is not different from that of many other charities in Pakistan: to help combat poverty, create sustainable income for low-income families. What makes it different, however, is its goal of helping create businesses within these communities so that they have a stable income thereby ensuring that the donations they receive have a long-term impact rather than a temporary one. This way Seed Out manages to create sustainable change for families, and incentivises them to become businesses owners who can then make a difference in their communities.
Their business model is very simple: people from across the globe can donate through a variety of payment options including donations via credit card, Paypal and cash. Moreover, Seed Out has made their process hundred percent transparent – from the moment you donate you can track your donation and the success of the business you’ve donated to on their website. In this way, the company is able to create a valuable sense of trust with their donors.
Another factor that sets this initiative apart from others is that once Seed Out uses these funds to provide micro-entrepreneurs and small businesses tools they need to grow, they then devise a stress-free monthly payment plan so that the businesses can pay back the company in an interest-free way that is in accordance with Islamic guidelines. When that money comes back to Seed Out, they are able to help equip other small businesses with similar essentials.
In the midst of this, however, Seed Out has had to face several obstacles. Crowd-funding – the concept of various people pooling money to help a singular project – is still uncommon in Pakistan. “Initially there were a lot of restrictions on crowd-funding in Pakistan. The situation has improved but it was quite difficult in the beginning.”
Another issue they had to overcome was that of attempting to prove to investors that their interest-free micro-finance model would actually work. “People thought it was a financially irresponsible move,” says Mughal. But in the long run they managed to address those concerns as the company’s success became apparent.
Selecting small businesses for their project was yet another challenge. “We wanted to make sure we chose hardworking, motivated people who actually intended to expand their businesses,” he says. They have created a strict filtering process in which applications are thoroughly reviewed to select people based on the types of businesses they’re starting, their entrepreneurial qualities and their future plans for their businesses.
As per their policy, Seed Out posts all of their success stories on their websites to allow donors to follow up on their donations. Today, the platform boasts over 800 stories of micro-entrepreneurs from impoverished backgrounds. “We’re also proud to say we’ve helped over 1,200 children go to school,” he says adding “as per our policy we bear the educational expense of two children from each family,” he adds.
While the project is currently operating in four cities, Mughal says they plan to expand the initiative further both on the national and global scale. They are also creating a back-end plan to make it easier for other micro-financing businesses to follow the Seed Out model.
What started as a small company from Pakistan is doing its part in bringing about long-lasting change to address a major issue. The team at Seed Out hope their story will encourage other young minds to engage in or create similar social initiatives for the greater good of their country.
The writer is an international relations graduate from SOAS, University of London. She tweets at @ameeraanii