Venture Lab leverages third-party investment capital for the first time to scale its innovative model supporting inclusive fintechs
WASHINGTON, Sept. 4, 2019 /PRNewswire/ -- Today, global nonprofit Accion announced that its seed-stage investment initiative Accion Venture Lab is adding $33M to its initial capital pool, with the launch of a new $23M fund and an additional, separate $10M investment from Accion. The new fund brings together a group of third-party impact and commercial investors that share Venture Lab's commitment to innovative fintech startups that leverage technology to increase the reach, quality, and affordability of financial services for the underserved at scale.
Launched in 2012 with $10 million in capital, Accion Venture Lab has emerged as a leader in fintech impact investing at the seed stage. To date, millions of people and small businesses around the world have benefitted from services provided by Venture Lab portfolio companies, and many of those companies have gone on to achieve substantial scale thanks to Venture Lab's catalytic capital. For every dollar Accion Venture Lab has invested, its portfolio companies have raised an additional $13 in equity capital from later-stage investors.
"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 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: a highly competitive sector, constantly evolving regulations that vary across markets, challenges building the right team, 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."
"There is strong potential for inclusive fintech startups to reach historically underserved communities while generating returns, and the oversubscription of the Accion Venture Lab fund is great validation of our early work investing in more than 40 innovative businesses operating in 30 markets," said Venture Lab Managing Director Vikas Raj. "This new pool of capital enables us to scale our efforts and remain at the forefront of seed stage investing in inclusive fintech."
Investors in Accion Venture Lab now include FMO, the Dutch entrepreneurial development bank; the Ford Foundation; the ImpactAssets Giving Fund of Blue Haven Initiative; Heifer Foundation; MetLife Foundation; Open Society Foundations; Pace Able Foundation; Proparco, the French Development Agency (AFD)'s private sector financing arm; Prudential Financial; Stichting Hivos-Triodos Fund, managed by Triodos Investment Management; and Visa Inc. (NYSE:V).
The Venture Lab portfolio focuses on an evolving set of key trends within the fintech space that offer the greatest potential to reach underserved communities. Today, those include insurtech, agricultural finance, digital lending, holistic MSME finance solutions, and personal financial management. Ultimately, these companies support entrepreneurship, resilience in farming, gig economy and migrant workers, healthcare, transportation, and education.
Venture Lab also partners with philanthropic organizations whose support enables it to provide specialized and extensive strategic and operational support to its portfolio companies and to invest at the higher-risk pre-seed stage in pursuit of its mission to reach the underserved.
As Accion's seed-stage investment initiative, Venture Lab is one component of the organization's approach to developing the inclusive fintech ecosystem to better meet the needs of the world's three billion financially underserved. Other elements of this strategy include Accion's partnership with Quona Capital -- a leading growth stage venture firm focused on fintech for inclusion in emerging markets -- and Accion's work with industry initiatives like the Inclusive Fintech 50, which elevates early-stage fintechs addressing financial inclusion.
Note to reporters: Accion Venture Lab launched in 2012 with $10 million in capital. It will now invest an additional $33M -- $10M from Accion and $23M from a coinvestment vehicle with third party funds, bringing Venture Lab's total capital under management to $43M, more than four times the initial amount.
Accion is a global nonprofit committed to creating a financially inclusive world, with a pioneering legacy in microfinance and fintech impact investing. We catalyze financial service providers to deliver high-quality, affordable solutions at scale for the three billion people who are left out of -- or poorly served by -- the financial sector. For more than 50 years, Accion has helped tens of millions of people through our work with more than 110 partners in 50 countries. More at http://www.accion.org.