MYC4 Reduces Staff Due to Lack of Capital

MYC4 has redefined it’s strategy and budget plans after it was unable to attract new funding from business angels as originally planned. Mads Kjaer, CEO and main shareholder has announced that he will invest 1.4 million Euro (approx. 2.1M US$) into the company in 2010. To reduces costs MYC4’s management has decided to conduct a collective termination of all employees’ contracts on Monday November 30 in order to renegotiate employment with all employees and give them the possibility of deciding what to do in the current situation with a three-month notice period.

Some employees have already decided to stay on board, just as the CEO and deputy CEO yesterday had their terminations withdrawn by the Board of Directors, which means that MYC4 will continue under the management of Mads Kjaer and Svend Toettrup.

For MYC4 2009 was an extremely difficult year as default rates of the loans of nearly all local providers peaked. Volume of new loans slowed to about a quarter of the high reached in mid-2008 as several providers were paused to evaluate/clear the situation.

The conflict with Ebony Capital Ltd., a provider in Kenya, reached new extremes. The legal battle led to a search of Ebony’s premises by the Criminal Investigation Department, Nairobi on Dec. 1st.

Furthermore MYC4 placed information adverts in a regional newspaper to encourage borrowers to make repayments on their loans directly to a MYC4 account instead to Ebony Capital Ltd. (picture of newspaper ad).

MYC4 even set up an information page directed at Ebony borrowers and linked it on its home page.

Given the circumstances 2010 will not be an easy year for MYC4, too.

MYC4 will cover for MISCOCI loans

Acting on problems that came about when an insurance scheme, that was supposed to cover over 200 loans in Ivory Coast, failed (see previous coverage), announced it will reimburse all lenders on these loans, if the loans default.

Mads Kjaer, CEO of MYC4, announced:

We have in previous update informed that we will intervene and take on the obligation towards the Investors and cover defaults on loans. MYC4 will cover all defaults on MISCOCI covered loans. In actual numbers this could amount to a total cost of EUR 388,000. This will put financial strains on our company, yet we believe it’s the right thing to do.

Now, what does it mean that MYC4 covers MISCOCI included loans? As noted, 242 loans in Cote d’Ivoire were supposed to be covered by MISCOCI insurance. These 242 are very likely to default within the near future – some are already defaulted (cf. MYC4’s default policy) and therefore MYC4 will cover Investors’ loss on their principal.

This means covering the spread between what has already been paid back and Investor’s principal or in other words: MYC4 will step in to reimburse Investors whatever amount they still have not received of their original investment. Meaning the original bid value minus total received repayments over time. We are currently working how we technically can do this in the system and will revert back with an update in two weeks time.

Loans without MISCOCI:
With regards to the not MISCOCI-covered Cote d’Ivoire loans, we are aiming at a solution that will create the best possible chances for Investors to get some of their money back by ensuring that Notre Nation and Ivoire Credit will continue to collect repayments also after the technical default on the platform.

Lenders welcomed this decision in forum feedback.

Other MYC4 news:

  • MYC4 wins prize as “best financial e-commerce” by FDIH, the Danish Association of Internet and Distance Trade
  • The first bid by IFU and CSR was made on MYC4 in their aim to invest 2.2 million EUR on MYC4 (see earlier coverage)

IFU and CSR Capital invest 2.2M Euro in Africa via MyC4

The Industrialisation Fund for Developing Countries (IFU) and CSR Capital have decided to invest a total of DKK 15 million (approx. EUR 2.2 million) in Africa through MYC4. The Danish Development Minister Ulla Tørnæs supports the decision.

“This is an extremely important milestone for MYC4. That IFU and CSR Capital now invest through MYC4 is an endorsement of our initiative as a serious tool in the fight to eradicate poverty in Africa through the marketplace,” says CEO of MYC4 Mads Kjær and continues:

“We hope this will inspire financial institutions, pension funds and companies to invest in Africa through MYC4. We are already well under way, but to make a significant difference for the development in Africa, this kind of investors play an important role.”

Political support
Danish Development Minister Ulla Tørnæs warmly welcomes IFU’s initiative to invest in Africa through MYC4.

“Danida has been the facilitator for MYC4. Through the Public Private Partnerships, Danida has supported the development of MYC4. I am glad to see the interest and support for the new marketplace. It shows the economic potential for investments in Africa,” says Tørnæs.

DKK 10 million from IFU, 5 from CSR Capital
IFU is an independent fund under the Danish Foreign Ministry. IFU’s purpose is to promote economic development in developing countries in partnership with the Danish industry, and now the fund invests DKK ten million in Africa through MYC4.

“With the investment IFU wants to contribute to poverty reduction and business development of small and medium enterprises in Africa,” says Investment Manager Kasper Svarrer from IFU.

In addition, the private investment firm CSR Capital invests DKK five million through MYC4. CSR Capital focuses specifically on social and environmentally sustainable investments:

“Good investments and development can and must go hand in hand in order to create the basis for sustainable economic, environmental and social growth and welfare in any society”, says CEO of CSR Capital Sven Riskær.


MyC4 introduces automatic bidding

MyC4 introduced "automatic bidding", an automatic bidding assistant that will bid on any new loan listings that match parameters set by the lender. Similar to the Standing Orders feature of, but not with as many selection criteria.
Mads Kjaer, CEO of MyC4, said:

The Auto Bid request came from several of the businesses we have talked with and also several Builders who asked for a quick way of get going.

You could say that this feature is also the preparation for e.g. philantrophy funds or bi-lateral organisations who want to use My4 to reach micro entrepeneurs in Africa at NO COST = 100.000 credits is 100.000 credits invested …

MyC4 now also enables the use of Paypal to transfer money into the MyC4 account.

Myc4 automatic bidding