Accion’s seed-stage investment initiative Accion Venture Lab has added USD 33 Mn to its initial capital pool. It has launched a new USD 23 Mn fund alongside a separate USD 10 Mn investment from the global nonprofit (Accion). Bringing together a group of third-party impact and commercial investors, the fund will invest in inclusive fintech startups.
The fresh fund was secured with capital contributions from several participants such as the Ford Foundation, Visa Inc., and Proparco – the French government’s development finance institution. By way of the added USD 23 Mn, Accion Venture Lab’s entire managed capital now stands at USD 43 Mn. The venture was launched in 2012 with a USD 10 Mn kickoff.
Since then, the fund has become a leader in fintech impact investments at the seed stage. The initiative has benefitted millions of people and small businesses from around the world, particularly through Venture Lab’s 36 portfolio companies. Many of the startups have achieved substantial scale. For every dollar Accion Venture Lab has invested, its portfolio companies have raised an additional USD 13 in equity capital from later-stage investors.
The new fund is considering startups from any geography, as far as they leverage technology to increase the reach, quality, and affordability of financial services for the underserved at scale. Accion Venture Lab generally does not have regional investment quotas, but it is looking to allocate about 25 to 30 percent of its funds to Africa.
June this year, the venture supported South Africa digital financing startup Lulalend in its USD 6.5 Mn Series A. The fintech startup uses internal credit metrics to provide Small and Medium Enterprises (SMEs) with short-term loans. It’s unclear how much Accion contributed in the round, but its new LP fund will follow the past practice of investing in the USD 500 K range.
According to Venture Lab Managing Director Tahira Dosani, the fund is seeing substantial growth in the amount of capital available for fintech startups. She said this was evident when the lab launched in 2012, adding that money isn’t enough.
“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.”
Image Courtesy: Disrupt Africa