As part of its Fellows in the Field series, TED recently published a video about a new startup trying to help low-income entrepreneurs obtain growth capital. The key component of the system? Text messaging.  

2013 TED Fellow Shivani Siroya founded InVenture, a company that developed an SMS-based accounting tool. Her idea for the service began in 2008 while she was working for the New York-based United Nations Population Fund. The tool, called InSight, was designed for micro-entrepreneurs-- specifically those who don't have any kind of formal financial identity. 

Typically these individuals are able to obtain informal cash loans for their businesses. However, their lack of accounting data makes it virtually impossible to obtain capital from established financial institutions.  

"What I found was [the financial institutions] felt that these micro entrepreneurs or individuals transacting in cash were too risky." Shivani Siroya said in the video. "What I wanted to do was change that perception and be able to bring in real data to be able to show that these individuals are not risky, and that there is so much potential sitting there."

Here's How It Works

Siroya explained how the system, which is now in Beta, works: first, users text in their income and expenses on a daily basis. Then InVenture texts them back a simplified income statement. Their history is recorded over time, and eventually users can obtain a credit score. They can then take this data to a financial institution and apply for a loan.  

"We've seen entrepreneurs that have had buckets of receipts before using something like this. And now they have a simple income statement on their mobile phone," Siroya said. 

"Now that they have that awareness, they have the abilities to really grow their businesses themselves." 

You can watch the full video on TED's blog here.