Can Vittana prove there is a viable commercial market for educational loans outside the U.S.? veterans are betting it can.

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Can Vittana prove there is a viable commercial market for educational loans outside the U.S.? veterans are betting it can.

The Vittana Foundation is a fledgling non-profit that aims to bring student loans to developing countries through person-to-person micro-lending.

While microcredit has made great strides, says Vittana CEO Kushal Chakrabarti, it hasn’t lifted poor entrepreneurs into the middle class. That’s usually left to the next generation, so the first chance borrowers get, they send their kids to school. He wants to make that step easier.


Kim Rachmeler (left) is a former executive who now advises and invests in the educational non-profit Vittana, started by Kushal Chakrabarti (right) and Brett Witt.

Making small loans to poor entrepreneurs has been so successful (at least financially) that it has spawned microfinance institutions around the world and investment by commercial banks such as Citibank and Deutsche Bank.

Student loans, however, are not common outside the U.S. and Europe.

“There isn’t capital flowing in because the model isn’t being proven, and the model isn’t being proven because capital isn’t flowing in,” said Chakrabarti, 26, a former engineer.

He and fellow veteran Brett Witt are hoping to use Vittana to show that loaning money to students in developing countries for education is a good investment.

And their former colleagues and managers are backing them.

Kim Rachmeler spent 10 years at as a vice president and senior executive responsible for everything from worldwide customer service to global supply chains.

She has been a big supporter of sites such as DonorsChoose and Kiva. With Vittana she saw a chance to get involved early on as a major backer.

Rachmeler joined Amazon when it had only 500 employees, building the company and striving to prove the online retail model.

Back then “everything we did was betting the company,” she said.

After retiring from two years ago, she said “I don’t have that shot of adrenaline every day,” but backing a non-profit technology venture with big ambitions, “I get to experience a little bit of that again. It’s an opportunity to make the world a better place.”

The challenge is helping Vittana grow big enough to be self sustaining during the worst recession anyone has experienced.

Former Amazon executive Joel Spiegel is also supporting Vittana, along with his wife, daughter and son, who is one of the non-profit’s seven volunteers.

In an art gallery near South Lake Union, several dozen people gathered recently to listen to Chakrabarti pitch the Vittana concept in an effort to raise more funds.

He tells them the story of a student in Peru putting himself through law school by working a year, then studying a year, then working another year to save tuition.

“People find amazing ways of scraping it together,” he said. “Some people make it; some people don’t.”

Vittana offers loans to send a student to school for a year in Peru, Nicaragua or Paraguay for less than $1,000. It works through local microfinance institutions (MFIs) such as Fundacion Paraguaya, to administer the loans. The money cycles from the individual lender to Vittana to the MFI to the student and back. The MFI charges borrowers interest on the loan of about 10 to 15 percent APR to cover its operating costs.

People attending the presentation wanted to know how long it would take to be repaid (in three years lenders get back the loan amount but without interest), and how Vittana can stay in business since it’s not taking a cut of the loan. Vittana plans to support its operations through donations, which it will request and handle separately from the loans, similar to Kiva’s model.

The non-profit has already drawn interest and investment from Facebook, which chose Vittana to participate in its incubator program.

“People have this image of what a poor person looks like.” said Chakrabarti. “They should be wearing rags. They should be living in huts.”

That’s not always the case, he said. Students Vittana has helped fund have jobs at radio stations, they spend time on the Internet, they study banking and chemistry, and they dream big.