Zain Ashraf Mughal ran into a peculiar problem while an undergraduate student at the University of Miami. “I used to regularly give money to poor people back home in Pakistan because Islam requires you to practice charity. But I couldn’t find any poor people here,” he laughs. He thought of asking his mother to find someone deserving back home so he could fulfil this duty, but found the idea of handout charity insufficient and quite useless when it came to actually changing lives.
The Lahore native was majoring in entrepreneurship and had been mulling over a business model that would convert the short term benefits of charity into a long term livelihood for the poverty stricken individuals who depend on the annual handouts of their richer brethren for a smidgeon of relief in their oppressed lives.
Thus was born Seed Out- a platform that integrates crowdfunding and microfinance to convert the short term benefits of charity into life changing support for the receiver. 25 year old Zain founded Seed Out while still in college and has since then launched a slew of ventures that are industry disruptors in their own right. The serial entrepreneur, philanthropist and serious prodigy speaks to PakWired about the ins and outs of his unique business model, what drives his ambition, how we’re doing charity wrong and what entrepreneurs can do to create a sustainable Pakistan.
What was your childhood like?
We are four brothers and I am the youngest in the family. My father has been running his own company since 1965. I’ve seen my brothers’ work hard to take the family business to the next level. So I’ve always had this entrepreneurial gene and the drive comes naturally from seeing my family work hard all the time.
But the one thing that’s really shaped me as an entrepreneur is my parents’ decision to let me be. For example, as a teenager I wanted to start a polo club in my city. They knew it was a doomed project. It was too radical an idea and there was no market as such for it in Pakistan at the time. But they let me go ahead anyway. So I put up all the banners, made the calls and invited everybody. But, predictably, it didn’t work out. I also worked part time with Walmart while in school, learning the various aspects of business from the ground up. My parents never stopped me from doing or learning anything. I was allowed to pursue anything I wanted to and that has made me the entrepreneur I am today.
You earned your undergraduate degree from the University of Miami. What contradictions in youth culture, education systems and mentality between Pakistan and America struck you the most?
The Pakistani education system is more rigorous, but there isn’t much chance to explore. The American education system is more laid back but you can study and explore as much as you like. You can learn anything-be it geology, photography, jazz music, maths….anything. That’s what I really loved about America. This kind of learning gives you a broader picture about the world. The successful entrepreneurs of our time didn’t come from a single subject background. Their experience with different angles of the world made them who they are and that is what I took away from my American experience.
For many people a western education, especially an American education, is a ticket out of their home countries and into a different kind of prosperity. Was not coming back to Pakistan ever an option for you?
No and I’ll tell you why. I believe that Pakistan is an untapped market. America is a very competitive and an over saturated market at this point. My main reason of coming back was obviously my family. But also the untapped market that is Pakistan is like a blank canvas. All you’ve to do is copy an idea from the western model and paste it here. You can improve it, tweak it or customize as you see fit. For any entrepreneur that opportunity is golden.
The only issue in Pakistan was payment gateways when I came back from America. The online industry was growing and it’s booming now. You can do so much here on a shoe string budget. Be it in terms of legal acquisitions, cheap labour or growth potential, what you can do in Pakistan you can’t do in America or other western first world nations.
It’s funny you say that you can copy paste any idea from the west because your maiden venture as an entrepreneur- Seed Out- is touted to be a true original. Has a model like Seed Out been implemented anywhere else in the world?
No it hasn’t. There are crowdfunding platforms and then there are micro-finance institutions. But integrating crowdfunding with micro-finance to create entrepreneurs to alleviate poverty is a model wholly unique to us. This is something that came naturally to me because, while growing up, I would see people coming to my parents and their friends for help. It was not so much about the money. Islam requires you to give 2.5 per cent of your income to those less fortunate. But charity that keeps the receiver dependent on future handouts is no favour to the poverty stricken. Pakistan is one of the highest charity giving nations in the world but still the issue of poverty is strongly prevalent here.
When my parents and their friends were practicing the Sadqa or Zakat I would see the same people return over and over again for money they urgently need to combat sufferings in their lives. Since then I wanted to create a system where even a small seed fund, like this charity, could be utilised to make the poor self-sufficient. I cannot help everyone. But everyone can help someone. And together we can create a sustainable Pakistan.
How does Seed Out work?
We handpick entrepreneurs who we think have the potential to manage their own businesses. We publish their profiles on our platform. We market them around the globe explaining through write ups and videos the difficulties in their life, their business idea and how he/she plans to achieve their goals with the money we loan them. Once we get them funded we assist them in executing their business plans, making sure the money is put to the right use. In order to stay true to our vision we have this policy of monitoring strictly that the funds are used only for starting their business and not channelled into another aspect of their life where they need money urgently. This might appear harsh to some, but without transparency we have no credibility.
Thanks to these rules people around the world can choose from 2000 profiles to select which one they’d like to help. Once they’re done donating, they can track where each and every penny of their charity is going.
While the business is getting off the ground we also train them in the necessary areas like bookkeeping, accounting, inventory, product selection etc. Once their business is up and running, the receivers are required to repay the loan minus any interest. We institute extremely easy EMI’s to ensure this, around 1 to 3 per cent of the original sum to be returned per month. That money coming back to Seed Out is going to be invested in other micro entrepreneurs. Thus we are recycling charity to ensure the sustainability of this system.
We have a side condition when investing in an entrepreneur. Once we have enrolled him/her in our program, they compulsorily have to send their children (at least two of them) to school with part of the money they raise from the business.
What is the average amount of money raised on the platform to help out one entrepreneur?
The amount ranges from 30,000 rupees to 200,000 rupees. The average range is usually 80,000 rupees to 100,000 rupees.
How many entrepreneurs has Seed Out created until now?
We have raised 106 entrepreneurs. Among these we have launched women entrepreneurs in general stores, rickshaw businesses, street hawkers, fruit vendors, crockery dealers and handicraft artisans. Anyone with an interesting idea who convinces us that they have what it takes and is passionate and deserving gets funded by us.
Given that the community Seed Out is targeting is largely not internet literate and the concept of crowd funding would be alien to them. How do you get them to come to you in the first place?
Asking for money makes you vulnerable. If someone needs help, he/she is always afraid and their self-esteem is raw. We don’t want people to be afraid or ashamed of needing help. That’s why we go to those who need our help. We don’t need them to come to us. From getting their voice out to getting them funded-it’s all our responsibility. Not theirs.
Of course the scale at which we can achieve this is directly proportional to the donations we receive. That’s why I stress on the ‘everyone helping someone’ caveat.
Given all the different ventures you are running and the myriad responsibilities you have to deal with- what is your time management strategy?
My recruitment strategy is my time management strategy. You need to hire the best people- the right person for the right job- and then let them do their work. If you need to be present in your business for it to run properly then there is a flaw in your business.
What is your take on the startup ecosystem in Pakistan?
There is so much entrepreneurial potential in Pakistan. Every second person is an entrepreneur- be it a street hawker, a general store owner or a startup launcher. In recent times even the government is playing a pivotal role with the Punjab Government launching Pakistan’s first technology incubator Plan9. We are on the right track.
But I think venture capitalists and angel investors need to take risks and focus on young people with innovative ideas and radical plans on how to make a difference. No positive change was ever created by playing safe.
What is your advice to aspiring entrepreneurs who want to create impact through their work?
My advice would be to stop taking your time for granted. You don’t have all the time you want to get your idea off the ground. You need to get started now. If you’re working for a cause larger than yourself then, rest assured, god has a plan for you.