Almond Finance

Almond Finance achieves financial inclusion for entrepreneurs in the developing world through a mobile platform integrating microfinance, digital payments and market mapping to bring sustainable prosperity to unbanked rural communities.  Lack of access to capital is among the main contributors to poverty globally. Two billion people worldwide have no access to banks; farmers, manufacturers, retailers and others, therefore, struggle to grow their businesses due to limited capital. Yet, in markets like Myanmar, as much as 95% of people have mobile phone connectivity despite this financial exclusion.  Almond, in partnership with local financial institutions, uses mobile technology and machine learning to enable individuals and small businesses in remote areas to overcome the most pressing economic hurdles by providing access to essential financial services on a single phone-based platform. 

Ending poverty, enabling decent work and facilitating economic growth are critical UN Sustainable Development Goals.  However, achieving these goals requires access to capital and markets which depends first upon financial inclusion.

Communities in developing countries need to invest in their farms and small businesses to generate additional income and prosper but a primary obstacle to economic growth in these regions is a lack of infrastructure facilitating lending, commerce and market connections.  

Although underdeveloped regions of the world are experiencing tremendous growth in telecommunications technology, that growth is far outpacing the installation of essential tools for banking and commerce.  This can be seen in Myanmar, our pilot market, where 80% of the population (43M people) are without access to banks (despite 95% of Myanmar’s population having mobile phone connectivity).  Beyond Myanmar, 2B people globally have little or no access to essential financial services.   This produces predatory lending practices filling the vacuum and results in impoverished rural communities with exploitative microloans.

Many of these economies remain predominantly cash-based.  Reliance on cash and financing from local moneylenders can result in exploitative practices whereby communities are paying 50-100% in interest on collateralized loans and 60-200% on uncollateralized.  

Almond provides financial inclusion by combining three functions on a single mobile phone-based platform:

1. Micro loans
2. Marketplace mapping
3. Digital transactions

When taken together, the three functions are collectively integral to achieving financial inclusion.  However, in much of the developing world, the three functions are served separately by distinct companies with poor coverage in rural communities which would benefit most from these services.

Currently, microloans are issued by several national and regional microfinance institutions which provide services through a network of brick-and-mortar stores. Limited by the physical locations, these institutions do not cater to most remote communities.

In the case of digital transactions, a couple national companies allow subscribers to transfer money with their phones. This service by itself is unsuitable to make purchases, especially for physical goods, given the lack of market mapping and digital infrastructure in rural communities. Almond Finance’s business model involves establishing partnerships with existing local microfinance institutions and digital banks to bring together micro loans and digital transactions under a single platform. Almond reinforces these services with a self-developed market mapping feature informing buyers of vendors available in their area who can accept digital cash in exchange of physical goods. 

Almond seeks to achieve systems-level changes both in Myanmar and globally:  

• 43M people in Myanmar: The number of people who remain unbanked and unable to engage in regional and national markets. Almond benefits this population through financial inclusion by providing access to capital essential for economic growth and connections to new markets. 
• 2.0B people worldwide: The total number of unbanked people around the world who are encompassed in Almond’s long-term vision for global financial inclusion. 

Immediate Impact

With the launch of the pilot, Almond will extend financing from lending agencies to recipients in need of capital for the purpose of building businesses or improving trade, utilizing microlending models growing revenue for individuals/SMEs within the first year.  This impact increases as markets for lenders are rapidly expanded by Almond.

Long-Term Impact

Users of Almond benefit greatly from network effects.  As more users receive loans and/or engage in transactions on the platform, real-time market information is aggregated and mapped, connecting products and services across regions in more efficient ways while better informing lending decisions and reducing lender risk.  Almond gets much-needed capital into the system and then accelerates commerce to achieve sustainable economic growth.

Almond evolved from the simple premise that we are our own best allies in realizing better futures for ourselves and our families but sometimes we all need a little assistance getting the ball rolling.  As a mobile-based platform providing financial inclusion to entrepreneurs in developing countries, Almond’s mission is to assist people globally in achieving economic growth, escaping poverty and pursuing better futures. The Good Jobs and Inclusive Entrepreneurship challenge is about finding scalable innovations leveraging our existing entrepreneurial capacities – for which financial inclusion is a prerequisite and a lack thereof currently affects two billion people worldwide.

Almond’s main competitor is the status-quo of a cash-based economy. In predominantly agricultural economies like Myanmar’s, most people are thinly distributed in rural areas out of reach of traditional financial institutions. Guiding the behavior change away from cash-based economies toward mobile-based digital transactions remains a challenge for adoption and success.

Almond’s innovation, beyond serving as a unique integrator for critical ecosystem stakeholders and reducing risk for lending institutions, is that it offers users the conveniences of cash along with the added benefits of digital payments. The main value in using Almond’s A-Coin includes:

• Instantaneous and secure transactions, powered by blockchain infrastructure.
• Simple and quick sign up process to promote ubiquity.
• Stable value guaranteed by USD-backed digital currency, compared to inflation-prone currencies in many developing countries.
• Long distance domestic and international A-Coin transfers with a small, flat fee.

Outside the use of cash, Almond has institutional competitors providing some functionality that Almond plans to offer. Examples are Wave Money (Myanmar), OK-Dollar (Myanmar), Gojek (Indonesia) and AliPay (China). Almond differs in the following ways:

• Decentralized A-Coin infrastructure allows Almond users to send money to family abroad without the international fees charged by competitors.
• Almond is the only blockchain-based digital payment platform among its competitors and has a more favorable expense structure. Thus, Almond users enjoy lower transaction fees compared to competitor services.
• Unlike competitors primarily targeting tech-savvy urban populations, Almond will also serve rural communities. Almond earns the trust of these smaller communities through its partnerships with well-known local non-profits and NGOs.

Almond’s A-Coin is powered by Circle’s (www.circle.com) USDC, which is issued by regulated financial institutions, backed by fully reserved assets, and redeemable on a 1:1 basis for US dollars; this means holding an A-Coin in an Almond wallet is equivalent to having a US dollar. Almond has the first mover advantage in Myanmar as the government eases regulations around digital currencies. This gives Almond users access to a more stable currency compared to using the local Kyat or Kyat-based digital payment platforms.

Another technology Almond is developing is an AI-based credit scoring platform for users without a traditional credit score or history. Having access to users’ spending habits through the Almond app and mobile phone use data, Almond will build rich datasets combining several categories of user information, not accessible to competitors. Through machine learning algorithms that compare this user data to the loan repayment information, Almond can build models predicting the credit worthiness of new users without any credit history and thus extend loans to people who would otherwise be ineligible for borrowing through traditional financial institutions.

The use of cryptocurrencies and blockchain has been well established since the inception of Bitcoin. Almond’s A-Coin, based on USDC, combines the security of blockchain with the trustworthiness and stability of a fiat currency, like the US dollar. USDC is traded across 60+ exchanges globally.  More info can be found at www.circle.com/en/usdc.

Regarding the AI-based credit scoring, several papers and use cases address the feasibility of the idea:

- Vidal, Maria Fernandez, and Fernando Barbon. 2019. “Credit Scoring in Financial Inclusion.” Technical Guide. Washington, D.C.: CGAP (www.cgap.org/sites/default/files/publications/2019_07_Technical_Guide_CreditScore.pdf)

- Gang Wang, Jinxing Hao, Jian Ma, Hongbing Jiang. 2011. “A comparative assessment of ensemble learning for credit scoring” Expert Systems with Applications, Volume 38, Issue 1.

Furthermore, LenddoEFL is a data services company offering credit scoring based on similar principles (www.lenddo.com). Almond is currently evaluating a potential partnership with LenddoEFL to utilize their credit scoring models until a custom in-house solution is developed.

Activity: Enable capital access

• Output: Almond bridges the gap between lending institutions and digital payment firms to extend capital to communities currently outside the reach of established service providers.
• Short-term Outcomes: Access to capital and critical financial services helps grow businesses and revenue.
• Medium-term Outcomes: Annual revenue and revolving credit/transactions among users increase.
• Long-term Outcomes: Regional economic growth accelerates, organically cycling capital back into communities.

Activity: Achieve informed lending

• Output: By leveraging machine learning to reveal, analyze and provide insights into rural marketplaces, Almond reduces risk by informing lending decisions for financial institutions that otherwise cannot extend capital beyond the reach of traditional brick-and-mortar banks and physical lending agents. 
• Short-term Outcomes: Lending institutions reach new customer segments, increase revenue and better serve their target communities with capital access.
• Medium-term Outcomes: Through network effects, Almond adds greater value to the collective with each additional user – offering new insights through digital transactions, market engagements and borrowing patterns built into increasingly accurate credit evaluation models.
• Long-term Outcomes: Previously unbanked communities in developing countries have access to essential financial services digitally and in the absence of physical lending institutions, reducing reliance on local, exploitative informal lenders.

Activity: Improve digital commerce and market connectivity

• Output: Increase user engagement in commerce through marketplace mapping and connectivity facilitating economic growth for rural communities.  Buyers/sellers are enabled to make/receive digital transactions in person or from afar through Almond's digital payment system, advertise through the Almond marketplace map, and find new markets and better rates. 
• Short-term Outcomes: Buyers and sellers connect faster, more efficiently and more securely, accelerating transactions and commerce across markets.
• Medium-term Outcomes: Greater commerce increases revenue and the emergence of digital marketplaces enhances insights captured by Almond, in turn informing lending decisions and injecting more capital into a faster, more efficient system.
• Long-term Outcomes: The transition to digital marketplaces reduces reliance on traditionally cash-based systems in developing regions, therefore creating more seamless, safe, interconnected economies, communities and people.  Interconnectivity supports socioeconomic stability essential to sustainable growth.

*The above analysis is drawn from primary market research, interviews and beta testing.

Almond's pilot is launching in August.  We have pre-identified 250 loan recipients and 250 small business vendors/retailers who will be immediately onboarded.  By the end of 2020, we project having at least 1,000 users.  The number of people directly benefiting from the use of Almond during subsequent years are as follows:

2021: 5,000

2022: 35,000

2023: 230,000

2024: 1,400,000

2025: 5,000,000+

Strategic Goals and Impact

2020
• Beneficiaries: 1,000
• Myanmar: Corporate partnerships and paying customers in the Bago and Yangon regions

2021
• Beneficiaries: 5,000
• Myanmar: Strategic partnerships with additional digital payment firms and lending institutions (country coverage ~89%)
• Regional: Pilot project planning in Vietnam and Indonesia
• Global: Partnership agreements with international lending institutions feasible (currently under preliminary discussion)

2022
• Beneficiaries : 35,000
• Regional: Pilots executed in Vietnam and Indonesia

2023
• Beneficiaries : 230,000
• Myanmar: Critical mass achieved for continued growth in Myanmar
• Regional: Initial traction achieved in Vietnam and Indonesia 
• Global: Pilots in follow-on global markets

2024
• Beneficiaries : 1,400,000
• Regional: Continued growth in Southeast Asia

2025
• Beneficiaries : 5,000,000
• Global: Multi-region growth and scaling (e.g. Central Asia, Africa, Latin America)

Challenges to Implementation

Almond Finance will address two core challenges:

Challenge 1: Financial and technological literacy- Despite the dramatic increase of telecommunications coverage and current 95% mobile phone saturation rate in Myanmar, usage largely revolves around Facebook and associated social networking applications.  Following market research and strategizing with industry experts, initial onboarding of users required to gain traction is our greatest challenge.

Challenge 2: Credibility-   Launching new products or services in developing countries comes with numerous cultural challenges revolving around trust and credibility.  This is especially true with respect to financial services.  Achieving adoption of a new brand during early stages following launch/piloting can, therefore, be a protracted process.

Mitigation to Challenges

Almond mitigates its two core challenges in the following ways.

Challenge 1: Financial and technological literacy-   A significant component of the pilot is the application of workshops in collaboration with local associations for the purpose of both raising awareness and educating beneficiaries on use of the platform.  To achieve this, both the lending agents of the partner microfinance institutions and members of the Myanmar Ethnic Entrepreneurs Association (MEEA) will play critical roles in engaging with and facilitating adoption among target communities.

Challenge 2: Credibility-  Almond will leverage social networks and associations with established credibility in two significant ways:  1) Partnerships secured with well-known firms which already have established credibility and about which there is considerable awareness.  2) Collaboration with MEEA; specifically, tying into existing local social networks with economic and entrepreneurial growth mindsets – and doing so with the approval and recommendation of known community leaders.

Full-time leadership team: 3

Part-time staff: 4

Contractors: 5

Adam Swartzbaugh (CEO): 15 years of global project management experience.  Almond is part of a 14-year endeavor to assist vulnerable communities in developing regions against exploitation through socioeconomic strengthening in Asia focusing on Myanmar and Thailand.  This includes founding/directing an NGO (gnetwork.org) in the region since 2007, and development work with multiple US agencies including USAID and UNDP.
-BA in International Relations and MA in Development from Brown University; MBA candidate at MIT; MPA candidate at Harvard.

Min Kun Htaw (COO): 20+ years of project management and development experience at the director and co-founder level; track record of founding, developing and managing successful start-ups, joint ventures, mergers, acquisitions and special purpose commercial vehicles with both domestic and foreign partners, including multinational private equity funds. Founding Executive Member of MEEA. Based in Myanmar.
-BA, Psychology; MA, Business Law.  

Yunus Sevimli (CTO): 5 years of R&D and product management experience in early stage tech startups. Coauthored 9 peer-reviewed scientific papers and filed 4 patents in tech for the developing world. Led a project in rural East Java over two years in partnership with an international NGO developing/deploying locally sourced food processing technology in communities with limited access to electricity.
-BS and MS in Engineering from Johns Hopkins University; MBA candidate at MIT.

Howard Davidson (CMO): 20+ years of success stories from formulating and executing plans delivering brand personas, account-based marketing, competitive analysis, brand awareness, lead generation, battle cards, copy, design, PR and advertising for startup and enterprise organizations.
-BFA

Partnerships are essential to the Almond framework.  For the pilot, Almond has confirmed a partnership with a national entrepreneurship association and has signed MOUs with a digital payment firm and prominent microfinance institution.  

• Microfinance Institutions (MFIs)- Almond extends the reach of MFIs beyond urban centers serviced by brick-and-mortar locations to reach rural communities.  Almond then provides valuable data on how loan funds are spent on the platform to inform future credit and lending decisions.  Through partnerships, Almond leverages existing MFI capital to deliver loans faster and more cost effectively.  After the pilot program which will facilitate lending for 250-500 borrowers to support beta-testing, Almond will quickly scale to reach thousands of new borrowers annually.  Another benefit of these partnerships is that Almond is not liable for defaults or delinquencies; lending risk, although reduced by Almond, remains the responsibility of partner MFIs.
• Digital Payment Firms- Almond drastically increases the amount of capital available and transacted digitally, driving up revenue for partner digital payment firms.  By leveraging high nationwide smartphone usage rates, Almond allows users to transact more efficiently via in-app QR codes and P2P transfers, similar to Apply Pay and Venmo, or via more traditional SMS methods.  Partnerships with existing digital payment firms significantly reduce overhead costs by giving Almond access to established national money agent networks, enabling end-users to conveniently cash in and out of the platform.
• Community Associations: Almond has partnered with the largest national entrepreneurship association (MEEA), facilitating product distribution and customer onboarding.

Almond's model provides value to stakeholders in the following ways:

• Individual users- Almond provides access to capital through a streamlined online loan application, disbursement and repayment process enabling users to find and compare vendors in their vicinity and receive discounts when making purchases using the platform.
• Vendors- Almond provides vendors effortless marketing to potential buyers in their vicinity simply by being visible on the digital map.  Almond also enables vendors to better track and visualize their revenue, profits, COGS and inventory. In return, research indicates vendors will provide a small discount to buyers for each purchase made using the Almond app. This incentivizes the buyers to transact on the app, instead of cashing out their money.
• Microfinance Institutions Partners- Almond extends MFI lending services to new segments while reducing credit risk. 
• Digital Payment Partners- Almond makes more money available for digital transactions and incentivizes users to keep their funds on the digital payment platform, in turn increasing revenue.  

*Almond makes money by charging a small transaction fee on digital payments and a percentage on loans facilitated through the platform.  In 2021, Almond will begin drawing revenue from advertising and data services provided to stakeholders.

Almond Finance generates revenue by receiving a small percentage fee from each transaction made on the app and a percentage fee from the interest on loans. These amounts are not passed on to the individual users but are generated from the margins partnering banks and microfinance institutions already charge their users. The decrease in the margins of the partner institutions are well offset by the increase in their transaction and loan volume.

Financial Highlights

2020
• Pre-seed round raise: $125K (projected)

2021
• Seed round raise: $2-3M
• Cost of customer acquisition reduced by 550%

2022
• Without reinvesting revenue: $500K net profit with low annual growth of ~10-15%

2023
• Net positive at high growth rate
• Compound annual growth: ~110-115%

2024
• $2.8M Net Profit (66% profit margin)

It’s clear that Solve is about more than just getting startups off the ground; it focuses on bringing together passionate disrupters to exchange and evolve innovative ideas that may overcome some of the world’s most important challenges.  Just as my broader experience at MIT has been a practical combination of both ideation and impact, I see the Solve community and the action-oriented synergies its members create as providing equal parts expert support and resourcing  - both of which are needed to bring ideas to action.  For over a decade I have been working to solve problems impacting vulnerable communities around the world ranging from child prostitution and human trafficking to poor access to education and vocational support.  One thing I've learned well is that solutions are only as good as the community of people contributing to them.  Solve is my kind of community.   

Board members/advisors.  Almond is working across multiple complex spaces within FinTech and tackling challenges ranging from digital lending and commerce to credit modeling in emerging markets.  Our current advisors have made possible much of what has been accomplished.  Bringing on additional support in these specific areas is invaluable.

Talent recruitment.  While Almond has completed its beta product and will release the pilot platform this summer, the architecture will only become more sophisticated.  Having skilled, visionary software engineers on the team is key.

Legal/regulatory matters.  International operations combined with a novel digital payment architecture requires navigating complex regulatory requirements in the US and abroad.

Funding and revenue model: We are looking toward our seed round financing within 18 months; we must be prepared to receive the necessary funding to grow quickly and efficiently.

Technology partners:                 

• Circle (www.circle.com): Developer of the USDC and the digital infrastructure that powers the Almond platform and the A-Coin
• LenddoEFL (www.lenddo.com): Provides the credit scoring services for people without traditional credit histories. Almond is considering a partnership while an in-house credit scoring model is developed.

MIT:

• MIT Digital Currency Initiative: Research and development for digital currency innovation and implications/applications for Almond.
• MIT CSAIL: Research and development into relevant applications of AI and machine learning within Almond.
• MIT Sandbox: Ongoing mentorship and funding
• MIT Venture Mentoring Service: Ongoing mentorship
• MIT Legatum Center: Ongoing mentorship. Awarded Almond the Voyager Travel grant.
• MIT Innovation Initiative, PKG Center: Ongoing mentorship. Awarded Almond an IDEAS grant.

The Good Jobs and Inclusive Entrepreneurship challenge is about finding scalable innovations leveraging our existing entrepreneurial energies, allowing all people to contribute to our collective future.  However, financial inclusion is a prerequisite to creating good jobs and leveraging existing capacities for many in developing countries and emerging markets.  Unfortunately, two billion people worldwide remain unable to access essential financial services.

For entrepreneurs in developing regions with limited access to financial services but with cellular connectivity, Almond provides the resources they need to access small loans, make digital transactions, promote their businesses and connect to new markets – all on their phone.  In short, Almond capitalizes on existing digital infrastructure to leapfrog legacy banking infrastructure.  By leveraging machine learning to reveal, analyze and provide insights into these new digital marketplaces, Almond reduces lending risk by better informing credit decisions for financial institutions that otherwise cannot serve communities in need. 

With funding from the GM Prize, Almond will be able to launch its platform in Myanmar – our pilot market where 80% of the population is without access to fundamental financial services but in which 95% of those same people have mobile phone connectivity.  The pilot will include core functionality testing and ongoing software improvements, onboarding of the first 1000 users and disbursal of more than $50k in capital from Almond’s microfinance lending partners to validate digital commerce and payment features and achieve initial traction with a 15% customer growth rate by the end of 2020.  

Lack of access to loans is one of the main impediments to achieving sustainable prosperity for small agricultural communities in developing countries. Traditional lending institutions are unable to serve these communities due to a lack of credit history, exacerbated by a fully cash-based economy.

Almond aims to provide the digital infrastructure to disburse and repay loans as well as the novel credit scoring system to provide individuals without conventional credit histories eligibility for small loans. The credit scoring system will be based on several categories of user data including spending habits, phone use habits, location data, social media information and self-reported demographics. Being a smart phone-based digital payment platform, Almond is uniquely positioned to capture these rich sets of data. A machine learning algorithm will then be used to draw inferences between the user data and loan repayment habits. The resulting models can be used to provide high quality loans to people with no credit history who would otherwise be ineligible for lending through traditional banks.

Almond presently has the digital payment platform well under development and is gearing up for launch in August 2020. In parallel, we are also exploring the AI-enabled credit scoring services, to be added onto our platform next year.

We will use the AI for Humanity Prize to cover the costs of the following activities:

• Build the features into our mobile application to capture and organize the spending and other behavioral data from our user’s devices
• Safely store and analyze the user data sets
• Collect lending data (loan requests, repayment habits and default rates) from our lending partners
• Match the user behavior data to the lending data to train machine learning algorithms
• Test the resulting models on real use cases
• Use the final models to assign credit risk profiles to users without a traditional credit history