north of neutral dialog

July 1, 2011

by anne lueneburger

Ashni Mohnot, CEO, Enzi, Mumbai

Imagine training low-income, foreign born women in artisanal baking to help them launch their own shop in Manhattan. Contemplate using Bollywood songs to protect children from prostitution in the slums of India. Or take the idea of turning food processor waste (such as rice hulls or nutshells) into fuel. Social change often starts small. Bold ideas need support to come alive. Over the course of twenty five years, venture capitalist Echoing Green has offered $30m in seed funding and hands-on support to some 500 social entrepreneurs and their ideas.

Ashni Mohnot, an inspiring young woman who has received the prestigious “Echoing Green Fellows” award, is among the 1% selected out of a pool of thousands of applicants. Her idea? She launched Enzi, a social investment portal that allows underprivileged Indian students to gain access to need-based educational financing by offering collateral that serves as a guarantee for bank loans.

The company and how it works

For millions of students around the world higher education remains out of reach – mainly due to a lack of funding. According to estimates by UNESCO, around 75% of potential students face this fate, as high as 90% in countries such as India.

Enzi, meaning ‘powerful’ in Swahili, has just completed its pilot phase.  Enzi facilitates lower-interest credit to the unbanked by leveraging bank capital with collateral raised through a global angel network of individuals and organizations. Their primary audience is the poor who will now be able to gain access to funding for vocational and skills training in India, previously reserved to individuals applying for degree education for international students in the US.

A bright mind

Ashni Mohnot grew up in Mumbai and comes from a family tradition of entrepreneurs: “My mother has a jewelry and clothes designing business which she runs with her sisters. My father, after a career in mineral trading, owns a hygiene products and disinfectants distribution firm. About ten years ago he was reading an article about how hospital infections kill a significant number of patients, and the tragic message of people going to a place for healing and not coming back home deeply moved him. He decided to do something about it.”

A smart and dedicated student, Mohnot had a broad range of interests growing up: “I loved literature, English, biology and psychology. I spent a lot of my childhood reading. When I started thinking about university, I struggled with the Indian system that seems to make everyone a specialist right from the start. I was not ready to commit to any one field, be it engineering, business, medicine or art. It was then that one of my cousins told me about Stanford. I got very excited.” After a campus visit, Mohnot was hooked: “I knew I had to go there, I knew that this was an opportunity I couldn’t miss!”

Stanford accepted her. The most challenging part, however, was funding this amazing opportunity, as a US school’s financial aid is typically reserved for US citizens or internationals that come from a country under-represented in US higher education: “We had to use my parents’ life savings and needed to ask for help from American relatives who agreed to co-sign private loans.”

Moment of pause

At Stanford, Ashni was thriving: “Coming to Stanford was the best decision I had ever made. It literally changed my life and helped put me on a path to realizing my potential.”

However, financially she continued to feel burdened, especially when her father changed professions during her studies, which meant that her financial resources temporarily dried up. Mohnot was in danger of not being able to complete her degree. After much lobbying, Stanford decided to extend – on an exceptional basis – part non-cosigner loan, part grant to Mohnot so she could continue her studies. Reflecting back, she recalls: “While I understood the need and the situation, it was scary to think of taking on so much debt. I wondered how I would ever pay it back. It was burdensome starting life that way.”

Entrepreneurship in her DNA

Mohnot went on to earn a Bachelor in Human Biology and English with Honors in Feminist Studies and a Masters in International Education which allowed her to gain a unique perspective on international development, global health, and the global higher education industry: “The potential of millions around the world is tragically wasted because they lack access to education, often due to the financial barrier.” Alongside this came the awareness that there were many other international students in the same boat as her and graduating with heavy debt: the seed for Enzi was planted.

Following graduation Mohnot started working as Director of Education at Stanford’s Martin Luther King institute. However, social entrepreneurship kept her intrigued and, alongside her work at the institute, she worked on supporting the launch of two social ventures and wrote articles on social entrepreneurship for PopTech, a media site dedicated to innovation.

Having been raised in a community of entrepreneurs had clearly left its mark on Mohnot:”I really love the idea of being my own boss and making my own decisions. I saw my parents take liberties which they would have never gotten away with in a corporate environment. When they wanted to take a vacation, they did; when they wanted to change a product offering, they would. They were not afraid to take risks.”

Future potential is the asset

Resulting from her own experience of financial hardship while going through school, Mohnot began to immerse herself into the – to her unknown – world of finance. An intriguing concept has crystallized as part of this process, removing financial barriers to the least privileged through a guarantor model.

While the Reserve Bank of India recommends that banks offer priority sector education loans of less than ~$8K without requiring collateral. Yet, private and cooperative banks generally require collateral for all education loans. National banks follow the mandate, but only for degree education. For the poor pursuing vocational training or skill-based education – which the Government of India estimates to be 500M people by 2022 – there are few viable credit options. Currently, mainstream banks (who could offer loans with 10-12% interest) are not set up to serve the poor, who rely on high interest loans from parallel credit systems such as microfinance institutions (25-30% interest) and moneylenders (50-60%+ interest).

Enzi is the first to apply a guarantor model for education lending and the first to utilize bank infrastructure for the same, instead of working with microfinance institutions to offer education loans, as other programs do. This will allow poor students to get lower interest loans (10-12%) from banks instead of other higher-interest credit options. Given that education lending is a priority sector as defined by the RBI, it is in banks’ business interests to give education loans. Enzi’s program will enable Indian banks to fulfill their priority sector quotas through education lending, while ensuring that Indian citizens who most need these bank loans but cannot provide physical collateral have access to them through guarantee support.

Unfamiliar with the terrain, Mohnot was nevertheless ready to charge ahead: “I had a moment of obligation – I just couldn’t let go an idea with such enormous, paradigm-shifting, world-changing potential.”

In bringing her idea – Enzi – to life, Mohnot’s knack for networking proved to be a real asset: “I have a genuine interest in other people, what they are motivated by, how they think, and whether there are synergies for what moves them and what I am passionate about.”

In addition to bringing key people together and raising funds for the start-up, Mohnot was able to make Enzi her full time priority in the fall of 2010, when she won the prestigious Echoing Green Fellowship. “I receive $30K per year over the period of two years. They also offer health insurance reimbursement as well as personal development stipends and business advice, and I have access to their impressive network of business and political leaders. What’s more, they are agnostic as to how the funds are used, so I can either invest it fully into my business or use parts of it to cover living expenses to fully dedicate myself to developing the venture. It all depends on the needs of the fellow and it has truly been phenomenally helpful to take the leap.”

What’s ahead?

So far the response has been extremely positive and Mohnot is optimistic that Enzi will become a full-blown operation helping a significant number of students fulfill their educational dreams. But she also admits that the concept is in its early days and will have to undergo numerous revisions to become fully operational and efficient.

Some of the challenges of the model include the need to find an appropriate bank partner willing to pilot investing in the poor by offering them bank loans against Enzi’s collateral. Banks in India are often risk-averse and historically do not serve the poor and hence, do not know how to evaluate their credit-worthiness. Enzi will probably have to step in as part evaluator of students, which in the absence of collateral that they cannot provide, will have to be a test of integrity and aspirations. There are many possible ways to test for integrity and ambition; the challenge is identifying and implementing the most relevant for this context.

Despite the challenges which come with developing such an innovative scheme, Ashni Mohnot’s idea resonates not only with interested individuals who wish to gain access to education, but also with the world at large. A number of firms have offered pro-bono advice, including a legal firm who gave free legal advice in the range of $1m for the original model of student investments and continues to be interested in working with Enzi’s new guarantee model. In addition to the honor of the Echoing Green Fellowship, Enzi has had coverage in a number of publications, including The Economist, Forbes, and WSJ’s SmartMoney.

Profit with purpose

Only time will tell whether Enzi will be a success. However, there are a couple of important messages about personal leadership.

For one, Mohnot’s story exemplifies the motivational power of intrinsic goals: “I am truly enjoying this journey, it is a meaningful venture, even though it is not always easy, given the different challenges of starting a business and developing an idea that is novel and still needs room to grow and evolve. Running my own venture speaks to my values of wanting to be independent and free. Much like my parents, I do not mind taking risks if I believe in the payoff of the investment.”

In line with living a life based on her values is Mohnot’s realization of wanting to create something greater than herself. Though Enzi is a non profit organization, Mohnot intends to not only make sure that the organization thrives and grows, but also has a revenue stream to make it financially sustainable and independent of donors and that she make a living from her work. At the same time, it is clear that earning an income is not her only motivator. Indeed, it is further down her priority list: “I know that I am privileged that I could study at Stanford. And I believe that it is my responsibility to use the skills and experiences I now have to make a difference in the world. My work is my legacy – I need to leave behind when I die something that was larger than my life itself. I cannot live any other way.”

A good part of what we know about this particular aspect of personal leadership is informed by the work of psychologist Erik Erikson. His widely accepted concept is that people pass through a series of stages over the course of their life. One of these stages is generativity (as opposed to stagnation) – a concern with matters outside the self, but more with the world and next generations. On the personal side it may involve raising children or supporting a cause such as animal rights. On the professional dimension, it can be as ‘small’ as mentoring a younger colleague, or as big as starting a second career that revolves around a topic or area that matters to the individual based on his or her value system and set of experiences. A famous example is Bill Gates who stepped down in 2000 as CEO of Microsoft to pursue a number of of philantrophic endeavors through the Bill & Melinda Gates foundation he had launched that same year.

Generativity tends to evolve later in life. In this sense, Mohnot’s high level of psychological maturity at the beginning of her career stands out. We often see a life crisis as the trigger for generativity at such a young age. In Mohnot’s case, it was her financial difficulty that had a major impact on her. Her college majors, her openness to taking risks, and her optimistic outlook on life subsequently created an opportunity that she couldn’t pass up. Recognizing her personal growth as part of the growth of a greater whole caused her to reframe her goal in a bigger way, ultimately not only enriching her own life but also the life of others.

Which brings to mind one of my favorite Gandhi quotes: “You must be the change you wish to see in the world.”

You can follow Ashni.

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