EFL began initially in 2006 as an idea of co-founders Bailey Klinger, a fellow at Harvard’s Center for International Development and Asim Khwaja a professor at the John F. Kennedy School of Government at Harvard University, while they were participating in the CID South Africa Growth Initiative. They were struck by the fact that entrepreneur’s access to finance could be such a problem in South Africa, a country with a financial system more developed than many OECD countries. After spending some months analyzing the problem, Asim and Bailey focused on low-cost screening tools and alternative financial contracts as methods to stimulate entrepreneurial finance.
After a small feasibility study, in 2008 Asim and Bailey received a grant from Google.org and SNV Latin America to launch the ‘Entrepreneurial Finance Lab’ project within Harvard’s Center for International Development. The aim of this project was to pilot test alternative screening tools in a network of financial institutions across Africa and Latin America. During the next two years, the Entrepreneurial Finance Lab worked with the world’s leading psychometric firms and entrepreneurship researchers to assemble a prototype credit scoring tool.
In 2010, the Entrepreneurial Finance Lab became an independent private organization that has developed and rapidly spread and scaled-up tools to identify high-potential entrepreneurs and perform credit scoring. EFL works in partnership with the Entrepreneurial Finance Lab Research Initiative at Harvard’s Center for International Development, which is the home of EFL’s research into the impact of psychometric tools on access to finance, entrepreneurial training and skills, and experimental alternative financial contracts.
EFL has forged ahead as a leader in applying psychometric principles to screening entrepreneurs. Along the way EFL has built new partnerships, increased testing and expanded access to finance for entrepreneurs worldwide.