Accion, a global nonprofit focused on financial inclusion announced last week that its seed-stage investment initiative Accion Venture Lab has closed $33 million in fresh capital; with $23 million of it coming for Accion Venture Lab’s new fund from third-party investors and an additional $10 million investment from Accion itself. Launched in 2012 with $10 million in capital, Accion Venture Lab will now have $43 million under its management.
“The new [$23 million] 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,” said Accion in a statement on Tuesday.
Accion Venture Lab has emerged as a leader in fintech impact investing by investing in tens of fintech startups around the world including Now Money from the United Arab Emirates and Tez from Pakistan. According to its statement, for every dollar Accion Venture Lab has invested, its portfolio companies have raised an additional $13 in equity capital from later-stage investors.
Tahira Dosani, the Managing Director of Accion Venture Lab, in a conversation with MENAbytes, said that their investments are global with a focus on emerging markets, adding that they have plans to continue investing in UAE, Pakistan, and other markets in the Middle East & North Africa.
Washington-based Accion Venture Lab, according to the statement, is typically the first institutional investor in its portfolio companies, providing both capital and extensive strategic and operational support across a broad range of functional areas.
Tahira, speaking to MENAbytes said that they invest in early-stage startups (with average cheque size of USD 500,000) that are leveraging technology or innovation to improve the reach, quality, and affordability of financial services for low-income and underserved individuals and small businesses, “Our initial investment in a startup is always at the seed stage, but we will follow-on in A and B rounds in companies we have invested in.”
Speaking about their portfolio companies (Now Money and Tez) in MENA & Pakistan, Tahira added, “We see a lot of potential in both these businesses. Tez provides consumer credit in Pakistan to individuals who struggle to access credit through other formal means. The loans Tez provides are critical for income smoothing and day-to-day management for their customers. NOW Money serves migrant workers in the UAE, providing them with a digital bank account, debit card, and the ability to send remittances digitally and quickly back to their families. We expect both of them to see continued growth over the coming years.”
“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.”
Michael Schlein, President and CEO of Accion, commenting on the occasion, said, “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. 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.”
Accion Venture Lab’s portfolio companies, according to the statement, offer potential to reach underserved communities by building solutions around insurtech, agricultural finance, digital lending, and personal financial management, ultimately supporting entrepreneurship, resilience in farming, gig economy and migrant workers, healthcare, transportation, and education.