Nonprofit Microfinance Platform Wokai to Close

Microfinance platform Wokai announced today via an email to contributors and a public letter on its official site that the non-profit company is “starting the process of winding down Wokai and concluding operations.” Apparently, the shutdown is the result of a failed search for a new CEO in combination with funding obstacles that have apparently made continuing that search impossible.

Although the company itself is based in California, its operations were in China, and its closing is a big loss for China’s tech sphere. Wokai was that rarest of startups: the one that’s attempting to solve a real problem. It used its internet platform to help users provide small loans to Chinese people in rural and impoverished areas to support their businesses. Over its five years of operation, Wokai achieved remarkable success:

Over the last 5 years since starting Wokai and 3.5 years since the launch of our website, our team and global supporter community has raised over a half a million dollars in loan capital for micro-entrepreneurs living under the poverty line in China. We’ve worked together to fund over 1,500 micro-loans to 961 borrowers, all at an over 98% on-time repayment rate. When you take into account the families of our micro-entrepreneurs, these funds have supported over 4,000 people to start the process of moving out of poverty.

Wokai will use its existing capital to continue financing “micro-entrepreneurs” in rural Sichuan and Inner Mongolia, and expects to impact an addition 9,000 entrepreneurs over the next ten years. But it appears the company will not be accepting new contributions, and the existing capital will be distributed by Wokai’s field partners, NGOs on the ground in China that are separate from Wokai but had partnered with Wokai to help distribute its funds.

I’m very sad to see Wokai go, but I hope that discussion of it will remind people that there are many ways to define success when it comes to startups, and making boatloads of money and executing a million-dollar exit doesn’t have to be one of them. Wokai may be closing, but it has already helped thousands of people across rural China build businesses and raise themselves out of poverty. It would be stupid to see that as anything but a tremendous success.

[Wokai Announcement Letter via lots of people on Twitter]