Start-up investment initiative Accion Venture Lab has added $33 million to its initial capital, with the team estimating that up to 30% of this amount will go to emerging-market fintech startups in Africa.
Launched in 2012 with a capital of $10 million US, Accion Venture Lab is a leading investor lab that seeks to fund early-stage Fintech startups to increase global financial inclusion. It has now launched a new fund with an additional $33 million, including $10 million from Accion and $23 million from a third-party co-investment vehicle, including the Ford Foundation, Blue Haven Initiative, Proparco, Prudential Financial, Stichting Hivos-Triodos Fund, and Visa.
The Accion Venture Lab team plans to invest between 20% and 30% of this capital in African financial technology companies.
These startups will be originally sourced from Accion’s lead investments around the world. The lab has already made its first seed investment in the US Fintech platform for workers in the market economy, Joust.
The new fund will also give an equal footing to all relevant Fintech startups, regardless of their geographical location – frontier markets, emerging and developed markets.
So far, the laboratory has a portfolio of 36 Fintech startups investments on five continents, including African startups such as Apollo Agriculture, Lidya and Lulalend. These startups have grown to scale, providing solutions to millions of people in their markets.
“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.”
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