Seed-stage investment initiative Accion Venture Lab has added US$33 million to its initial capital pool, with the team estimating up to 30 per cent of this will go to fintech startups in emerging markets in Africa.
Launched in 2012 with $10 million in capital, Accion Venture Lab is a leader in fintech impact investing at the seed stage. It has now launched a new fund with an additional US$33 million, including US$10 million from Accion and US$23 million from a co-investment vehicle with third party funds, including the Ford Foundation, Blue Haven Initiative, Proparco, Prudential Financial, Stichting Hivos-Triodos Fund, and Visa.
The Accion Venture Lab team estimates investing between 20 and 30 per cent of this capital in African fintech companies.
“Despite progress, three billion people still have no safe or simple way to save money, get a loan to build a business, pay a bill, or protect their health and property with insurance,” said Michael Schlein, president and chief executive officer (CEO) of Accion.
“Fintech startups are finding new ways to provide products and services that help these underserved people. Yet often startups lack the capital and strategic support they need to grow and scale their impact. Accion Venture Lab addresses this need.”
Inclusive fintech startups face the same significant entrepreneurial challenges as other startups, as well as additional challenges like high levels of competition, evolving and varying regulations, and tight margins. To address these needs, Venture Lab – typically the first institutional investor in its portfolio companies – provides both capital and extensive strategic and operational support across a broad range of functional areas.
“We’re seeing substantial growth in the amount of investment capital available for fintech startups from what we saw when Accion Venture Lab launched in 2012, but money isn’t enough,” said Venture Lab managing director Tahira Dosani.
“Capital must be paired with strategic and operational support that is informed by a deep knowledge of the sector, target customer, and a deliberate focus on how new technologies can help the underserved build better lives. We can accelerate the growth trajectories of companies through our capital plus approach to investing.”6