Does Microfinance Fill the Funding Gap for Microentrepreneurs? A Conceptual Analysis of Entrepreneurship Seeding in Impoverished Nations

  •  James Brau    
  •  Sunshine Cardell    
  •  Warner Woodworth    


We address the role microfinance institutions (MFIs) play in funding entrepreneurial ventures and present a distinction between the types of entrepreneurs that seek MFI and traditional venture funding. We argue that microfinance can serve successfully as seed financing for microentrepreneurs in under-developed economies around the world. By comparing bootstrapping and private equity seed-financing in developed economies to microfinance seed-financing in impoverished economies, we show that the different entrepreneurial characteristics in the two economies have similar funding gaps but are solved with different sources of funding.

This work is licensed under a Creative Commons Attribution 4.0 License.