Accion Venture Lab Launches New $23 Million Fund

By Annie Baker ● September 9, 2019
  • Global nonprofit organization Accion announced that it is launching a new $23 million fund in order to bring together innovative fintech startups to help the underserved at scale.

Global nonprofit organization Accion has announced that its seed-stage investment initiative Accion Venture Lab is adding $33 million to its initial capital pool with the launch of a new $23 million fund and an additional separate $10 million investment from Accion.

This new fund brings together a group of third-party impact and commercial investors that share Venture Lab’s commitment to innovative fintech startups leveraging 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 emerged as a leader in fintech impact investing at the seed stage. So far, 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 due to Venture Lab’s catalytic capital. And 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 Accion president and CEO Michael Schlein. “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.”

Fintech startups are known for facing the same significant entrepreneurial challenges as other startups as well as additional challenges such as a highly competitive sector, constantly evolving regulations that vary across markets, challenges building the right team, and tight margins. And to address these needs, Venture Lab — typically the first institutional investor in its portfolio companies — provides 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,” added Accion 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.”

Accion Venture Lab investors now include Dutch entrepreneurial development bank FMO, 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.

“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,” explained 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.”

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. And today those include insurtech, agricultural finance, digital lending, holistic MSME finance solutions, and personal financial management. These companies support entrepreneurship, resilience in farming, gig economy and migrant workers, healthcare, transportation, and education.

Venture Lab is also known for partnering 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 for developing the inclusive fintech ecosystem to better meet the needs of the world’s three billion financially underserved. And 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.

Accion Venture Lab originally launched in 2012 with $10 million in capital. And it will now invest an additional $33 million ($10M from Accion and $23 million from a coinvestment vehicle with third party funds) bringing Venture Lab’s total capital under management to $43 million, more than four times the initial amount.