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collage of money, key, globe, worker, harvard
collage of money, key, globe, worker, harvard collage of money, key, globe, worker, harvard

Potential Partners

The Entrepreneurial Finance Lab (EFL) is looking for pilot testing partners, particularly banks and other financial institutions, who have access to a suitable sample of small-scale entrepreneurs. We have developed and collected prototype tests of entrepreneurial ability and honesty, which partners will administer to a set of their new or existing clients.

Benefits of participating in pilot studies

There are many benefits to participating in this study. The most significant and direct return is that pilot partners will be provided with preferential access to the screening technology. Moreover, they will receive a robust analysis of the tool's effectiveness for their own actual customer base and context. Partners will be able to add this technology to their existing credit scoring procedure, increasing its accuracy and reducing costs. This tool could also allow them to penetrate new market segments of unbanked, underfinanced small and medium sized enterprises that are currently so difficult to evaluate. Our figures suggest that this is a significant market opportunity: missing revenues of SMEs locked out of the financial system in developing countries exceed $3.5 trillion dollars worldwide.

Characteristics of a suitable sample

For the purposes of a pilot trial, a sample should have 300 or more owners/operators of small businesses (0-25 employees, turnover of less than $1 million USD) that:

  • Have performance data: we need access to some type of performance data against which we will compare the test results. For example, existing borrowers will have a bank account history showing how well (or poorly) their business has performed, whether or not the client has made loan payments on time, and perhaps their credit score. For new applicants, they will be evaluated by the partner's traditional and proven screening process, and we can compare the results of this screening process to the test results.
  • Are accessible: there must be an opportunity to access the entrepreneurs and administer the test. This can be done in many different ways. For example, if small borrowers must come in to a branch for a regular review, they can be asked to take the test at a terminal set up there. Or clients could be contacted and offered an incentive to go online and take the test. For new applicants, they can be administered the test as a part of their application process.
  • Have variance in their performance: there has to be variability in the outcome data for the pilot to yield useful results. The sample has to include some well-performing entrepreneurs and also some poorly-performing entrepreneurs

Resources Required

The EFL is funded by international donors, meaning testing partners receive our time and analysis free of charge, with the partner only responsible for direct expenses for the pilot. We will provide the test, either in pen-and-paper or electronic (stand-alone laptop or PDA) format, analyze the results, and present the findings to partner institutions. Partners in turn need only administer the test to their clients, collect the results, combine them with performance data, and return them to the Lab for analysis.

We are also constantly seeking new modules to pilot test. Interested parties are welcome to contact us at EFL@hks.harvard.edu, or post their comments and ideas in our forum.