A Legacy of Helping to Build Responsible Financial Institutions in the Global South

Gil Crawford led MicroVest for two decades.

MicroVest’s longtime CEO reflects on successes, challenges and lessons learned

During two decades as CEO of MicroVest, Gil Crawford led the microfinance pioneer to provide over $1.6 billion in loans to 200 financial institutions in 60 countries. But that wasn’t the sole, or even most significant, outcome of the work of the organization in which MEDA was a founding investor. “We acted, perhaps inadvertently, as a pollinator of good financial practices,” he said. That was a breakthrough in an industry where some organizations operated in unethical ways. MicroVest proved that “you could run a solid business in a just and ethical way and build good returns for everyone.”

Crawford is no longer active in the day-to-day management of MicroVest Capital Management. It was acquired by DAI, a global development company with corporate offices across five continents, in late 2021. He had considerable work in international development and the microfinance industry prior to co-founding MicroVest in 2002. Immediately after grad school, he saw a summer internship opportunity with the foreign service. As part of his application, he sent in a photo of himself holding a pitchfork, with pig manure and a pig under his arm. The recipients laughed and decided to send Crawford to Guinea, where authoritarian rule was the norm in the 1980s. “It was sort of North Korea with palm trees,” he said of the posting. He was fascinated by the resilience of entrepreneurs who “weren’t supposed to exist” in that setting.

Crawford then got a job offer from the Chase Manhattan Bank in New York, and a separate opportunity on the same day to run a delegation for the Red Cross in Chad. When a friend urged him to take the Red Cross job, he asked Chase Manhattan for a deferral on the banking job and went off to Chad. Two learnings from the Chad posting stick in his memory. He recalls dropping off bags of rice and tins of oil, which never made it to their intended recipients. Instead, they ended up on sale in the market almost before the trucks returned to pick up supplies.

He also recalls a well dug by foreign donors that had pristine water. “By the time I left, that was broken, and no one was empowered or incented to repair it.” In 1991, he created the Seed Capital Development Fund, a non-profit that was an early player in the US microfinance movement. There, he was first introduced to Gerhard Pries, CFO and president of MEDA Investments Inc., Allan Sauder (a future MEDA president), and MEDA’s entrepreneurial development work. In 2000, he took a position with the International Finance Corporation (IFC) as a Latin American microfinance and banking senior loan officer.

At the urging of CARE USA’s board member Bowman Cutter, Cal Miller, a former MEDA employee working as CARE’s director of economic development unit, commissioned a market study and then a business plan from Gerhard Pries and Gil Crawford. Crawford looks back fondly on his relationship with Pries, who chairs the board of directors of Sarona Asset Management after heading that private equity firm since it was spun out of MEDA. “I’ve worked a lot with Gerhard, and his early vision in multiple new ventures started by MEDA has been instrumental.” The two men contacted Damian von Stauffenberg, founder of MicroRate, a pioneering credit rating agency specializing in microfinance, and Joyce Bontrager Lehman, a US development practitioner who later served as a MEDA board member. Those four people worked on a market study and business plan for MicroVest.

Pries got an invitation to meet with Bowman Cutter, managing director of Warburg Pincus, a New York-based private equity firm. The conversation involved what it would take to get MEDA on board. Pries requested enough money to run the organization for three years, the ability to hire financial professionals at good wages, an independent investment committee, and an autonomous board. He expected to be rebuffed, but Cutter responded, “We’ve been waiting to hear something like this for three years.” When Crawford left IFC, Cutter and Pries asked Crawford to run MicroVest (MV).

Three organizations invested a total of $1.3 million in MicroVest before the organization turned the corner. Seed Capital put in 10 percent. CARE and MEDA both contributed 45 percent. At the time, Pries and Crawford thought MV might eventually be able to raise $35M in assets under management. At its high-water mark, MicroVest had raised almost 10 times that amount for investments in responsible financial institutions in emerging markets. Crawford said about the financial return on the founders’ investments, “They did very well.” He was pleased by the entrepreneurs MEDA chose to represent it on MicroVest’s board. MEDA brought in men who had run large businesses one step removed from the farm gate, he recalled. “When the MEDA guys spoke, they spoke with such integrity that the investment bankers listened.”

The earliest MEDA board members on MicroVest were Pries, Manitoba entrepreneur Fred Wall, and Pennsylvania businessman R. Clair Sauder. Of Sauder, Crawford recalled that MEDA president Allan Sauder appointed R. Clair “to be the goalkeeper.” The Pennsylvania Sauder apparently liked what he saw and approached Crawford about investing in the company. With significant support from Pries and Allan Sauder, Wall took Crawford across Canada and introduced him to Mennonite businesspeople who were asked to consider investing in MicroVest.

Crawford learned later that many of the early MEDA investors saw their impact investments as a sort of donation and were pleasantly surprised at the return of principal and dividends. CARE followed MEDA’s lead and helped out with fundraising, introducing Crawford to investors in California’s Silicon Valley tech hub. In 2004, MicroVest launched a $15 million fund. That launch opened doors with other investors, in Atlanta’s real estate world and people at Lehman Brothers’ emerging markets bond desk. As a result of the conversations with Lehman Brothers, MicroVest decided to do a collateralized loan application, putting together 12 loans and selling portions. One investment bank bought the entire $40 million deal. While Lehman Brothers did not survive the 2008 financial crisis, the MicroVest fund did and was successful.

After calling on JP Morgan for seven years, conversations resulted in a $60 million private equity fund being launched. The fund was launched the day Lehman Brothers failed; the JP Morgan team got the fund sold. When capital markets froze up in 2008, investors wanted liquid investments. That led MicroVest to create a short-dated fund, which became the organization’s flagship fund. After the financial crisis, former MEDA board member Alex Hartzler helped bring the Cordes Foundation in as an important shareholder. That added strong fund marketing knowledge to the board in the person of Ron Cordes.

Crawford hoped that the fund could grow to between $250 million and $1 billion. However, institutional investors did not materialize, seeing the fund as too small. Just prior to the pandemic, MicroVest sought out potential equity partners that could help with distribution. During the pandemic, emerging markets fell out of favor, and growth stalled. Crawford knew of DAI, an employee-owned consulting firm. He began the process of negotiation, and a deal for DAI to buy MicroVest was concluded in November 2021. The sale was necessary “for us to break out of this highly specialized investment niche,” Crawford said. The ownership structure also played a part in the decision. “Non-profits are not inherently thinking like venture capitalists, that they’re going to put more money in (to help with expansion) when things are going well.”

MicroVest sent dividends to CARE and MEDA over the years, a decision Crawford regrets. He wishes the partners had reinvested the dividends or brought in more minority partners. Another mistake was not allowing senior staff to own a large stake in MicroVest sooner. That could have helped with the retention of key personnel, he realizes. “Every evening at seven o’clock, the value of the company walks out the door.” At its peak, MicroVest had between 25 and 30 employees. DAI has 500 full-time employees and works with another 4,500 consultants at any given time. A new division, DAI Capital, was established to create a capital markets business leveraging 50 years of consulting experience in financial markets. He said that MicroVest alumni are doing interesting things at the VISA Foundation, at IFC, and elsewhere. “We trained a lot of people in how to do impact investing.” MicroVest investments were also instrumental in building banks in many countries. These included XacBank in Mongolia, Satin Bank in India, and others in Bolivia, Ecuador, and Peru, he said.

“We trained a lot of people in how to do impact investing.”

— Gil Crawford

For Crawford, microfinance was the “sharp tip of the spear for the impact investment world and MicroVest played a role.” The microfinance sector is beginning to realize they have a deep bench of clients and a rich trove of data to examine. He said it will soon begin to use increased digital connectivity to lower costs and make products easier to use. DAI, MicroVest’s parent firm, is partnering with Olympus Capital Asia on a new fund that will create new, lower-cost products. “India is on the verge of a digital revolution, and I think we’re going to see a lot of interesting things there.” Crawford said that small distributed (often rooftop) solar projects in Africa are another growth opportunity.

Thirty years ago, microfinance was seen as a silver bullet to solve all poverty, he said. The industry has since realized that well-run microfinance institutions need to be able to provide large amounts of financing as clients grow their firms into small and medium-sized businesses.


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