Almond Finance

Adam Swartzbaugh is a joint MPA-MBA student at Harvard and MIT in Cambridge, Massachusetts. Originally from Maine, Adam has worked extensively in Southeast Asia to combat human trafficking and child prostitution.  In 2007, he started an NGO that has since been responsible for building multiple schools and social support programs for vulnerable children across the region. After receiving both his BA in International Relations and MA in Development Studies from Brown University, Adam went on to join the Army, serving in Europe, the Middle East and Pacific. Adam is now creating novel approaches to reducing crime, exploitation and conflict through collaborative economic development solutions globally.  Currently, Adam’s work includes the creation of digital technology tools designed to achieve financial inclusion by improving capital access and economic engagement across emerging markets, ultimately addressing root causes of community vulnerabilities through sustainable and scalable capacity building initiatives.

Almond Finance provides 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

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 providing services through a network of brick-and-mortar branches. Limited by their physical locations, these institutions do not cater to many remote communities.

For digital transactions, some companies serving rural communities allow subscribers to transfer money with their phones.  However, this service alone is unsuitable to make purchases, especially for physical goods, given the lack of market awareness and digital infrastructure in these areas. Almond Finance’s business model involves establishing partnerships with existing microfinance institutions and banks to bring together microloans and digital transactions into a single platform. Almond reinforces and extends these services with a self-developed market mapping feature informing buyers of vendors available in their area who accept digital money in exchange of physical goods, simultaneously providing lenders key market data and insights to reduce credit risk.

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 to grow 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 through enhanced digital credit evaluation methods that reduce lender risk.  Almond gets much-needed capital into rural economies and then accelerates commerce to achieve sustainable growth.

Almond evolved from the premise that we are our own best allies in realizing better futures for ourselves and our families but, sometimes, we 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.  Almond is about finding scalable solutions leveraging our existing entrepreneurial capacities – for which financial inclusion is a prerequisite and a lack thereof affects two billion people worldwide.  Like Solve, Almond seeks to elevate all people through innovation.

For me personally, Almond is the next step in an ongoing effort to strengthen vulnerable communities against poverty and mistreatment.  After learning about child prostitution and exploitation while managing a tsunami disaster relief project in Thailand in 2005, I started the GENESIS Network to counter human trafficking and create alternatives to black market economies  in Southeast Asia – to include building schools and developing education and vocational training programs needed to secure better opportunities.  

It became evident that economic development was essential to solving these issues in a sustainable way.  I sought a more scalable approach that would benefit the existing entrepreneurial capacities of those with whom I was working and realized that financial inclusion was a prerequisite to accomplishing a meaningful impact – a lack thereof currently affecting two billion people worldwide.  Almond evolved as a way to leverage emerging technologies to bring financial inclusion and economic opportunities to those in need but who remain beyond the reach of legacy financial institutions.

Natural disasters and combat have revealed some of the worst the world has to offer.  Nothing, however, compares to the loss of a young child’s spirit destroyed by years of sexual abuse and exploitation.  While managing tsunami disaster relief and reconstruction projects in Thailand in 2005, I learned of child prostitution and its feeding mechanism – human trafficking. 

I realized that to fight Southeast Asia’s ~200-plus child trafficking and prostitution networks, I needed extensive technical skills.  After meeting four ex-Special Forces officers then running rescue operations for enslaved children in the region, I joined the Army and, over the next decade, acquired the skills to do just that. 

Despite rescue efforts, more kids arrived in the streets.  Degraded networks reemerged and reformed.  There was still a supply and a demand – so I went after the supply.  I started an NGO to build schools and provide education and vocational training to vulnerable groups, creating economic alternatives in areas with historically high rates of exploitation.  The work confirmed that sustainable solutions to trafficking must address root causes such as economic underdevelopment, poverty and regional instability.  To achieve these, financial inclusion is essential.  Now, Almond is how I can provide that inclusion.

This will get done – that's my attitude about the project and, since I can remember, the right attitude has always gotten the job done.  However, I alone cannot make Almond work.  I surround myself with others who have strengths where I have weaknesses.  Creating systems of such people who love to create and are passionate about the cause has always been, and remains, my most important skill.

With over a decade of experience training, managing and leading multinational teams in government, nongovernment and military communities in the region, I've become accustomed to creating innovative solutions to complex socioeconomic challenges and am therefore fully confident in my ability to create a globally relevant solution to financial exclusion and unify the requisite stakeholders to see it into action.

There are of course still some gaps.  None of my experience makes me a savant in financial technology, software engineering or machine learning – that's why I brought on an absolute wizard of a technical co-founder.  I have gaps in my business acumen – that's why I’m attending MIT for an MBA.  It’s also unlikely I have the knowledge to navigate all of the important policy implications Almond will have as it seeks to redefine commerce and finance for many developing regions – which is why I’m also doing my MPA at Harvard, leveraging some of the best minds on the matter.

Ultimately, Almond’s success will be a function of the phenomenal people contributing to it – and they all have great attitudes.  

While building a school in Thailand, I was laying the foundation for the last of multiple classrooms.  The monsoon season arrived, but I was determined to get it done.  While mixing concrete, it started raining.  “We should stop” said Bay, a local worker.  Instead, I hatched a crafty plan to put less water in the mix and “let the rain even things out.”  Sure enough, upon inspection days later I saw hairline cracks throughout.  The volunteers, not aware, asked if they could start laying bricks.  I knew the foundation was faulty, but to demolish it and start again would be a nightmare – and embarrassing.  Struggling with the dilemma I finally whispered to everybody “stop, I botched it...we need to do it over – to do it right.”  When I turned, I saw Bay who had already noticed the cracks, nodding.  I sent the volunteers to another project.  Bay and I spent the next two days sledgehammering the foundation into oblivion before starting again.  What did I take away?  Do something right or don’t do it at all.  If you still get it wrong, have the integrity to take responsibility, and just do it again.  Integrity beats adversity every time.

In the last ten years I have led teams of 5-100+ men and women on three continents and in complex environments spanning conflict, security and diplomacy.  Providing a clear sense of purpose, direction and motivation has been at the heart of leadership throughout.  I have led units through combat in the Middle East, counter-trafficking operations against transnational criminal networks with foreign law enforcement agencies in Asia, and disaster response projects in the Caribbean.  My greatest pride, however, has been in bringing together conflicting groups on common ground to collaborate in support of their children’s welfare and communities’ futures.  In one instance, it was the building of a communal school in Southeast Asia with the combined resources, energies and commitments of multiple groups that resulted in a shared  resistance against exploitation - drastically reducing recruitment of children into black market economies over the subsequent five years.  I see Almond Finance also as a unifier, facilitating collaborative economic development by bridging the divide across otherwise antagonistic groups and isolated markets for the purpose of commerce, opening lines of communication and opportunities for deeper conflict resolution.  

Almond’s main competitor is the status-quo of a cash-based economy. In predominantly agricultural economies, 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 digital money 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 transfers with a small, flat fee.

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

• Decentralized money 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.

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.

Local partnerships are essential components within the Almond Finance framework.  

Myanmar Ethnic Entrepreneurs Association (MEEA): Community partner and largest national entrepreneurship association in-country, facilitating product distribution and customer onboarding.

Financial institutions: Almond is partnering with both traditional banking and microfinance institutions to facilitate financial services through the digital platform.

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.  

Almond Finance generates revenue by receiving a small percentage fee from certain transactions 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.  In 2021, Almond will also begin drawing revenue from advertising and data services provided to stakeholders.

Grant Funding: $16,100 

MIT PKG IDEAS Challenge: $7,000

MIT Sandbox Funding: $6,000

MIT Legatum Center: $1,600

MIT 100k Competition: $500

Pat Tillman Foundation: $1,000

Currently seeking pre-seed financing of $250k.

Sales and Marketing: $33,500

R&D: $49,000

General and Administrative: $25,500

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.

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.