‘Three decades of microfinance key to social investing – Finca Ventures head

Finca International’s 30-year experience in microfinance has given newly launched impact investor Finca Ventures a good grasp on what it takes to scale social enterprises, says the new entity’s managing director Ami Dalal.

The comments by Dalal (pictured above) follow the organisation’s announcement last week that it had launched the Finca Ventures impact investment platform.

Finca International is the majority shareholder of Finca Impact Finance, a global network of 20 community-based microfinance institutions and banks.

In an email earlier this week, Dalal told Ventureburn that Finca International had helped pioneer the microfinance movement in the 1980s when such market-based solutions were “not commonplace”

Some of the African social enterprise startups that Finca Ventures has invested in include Eneza Education, Good Nature Agro, and Sanivation

In Africa, Finca Impact Finance has a footprint in Uganda, Tanzania, Malawi, Zambia, Nigeria and the Democratic Republic of Congo (DRC).

“The experience of growing and scaling a microfinance network in some of the world’s most challenging markets afforded us a deep understanding of what it takes to grow a social enterprise and a keen appreciation of the needs of low-income customers,” said Dalal.

She added that part of this understanding had led Finca International to conclude that access to capital, while absolutely necessary, is not “a silver bullet” that can overcome poverty.

“Many of the customers we care about still lack access to basic products and services, like energy, sanitation and health care, that could improve their standard of living,” she pointed out.

“We launched Finca Ventures to better leverage the knowledge and trust networks of the global microfinance network we have built, and use it to get more life-enhancing products and services into the hands of the people who need them most,” she explained.

‘Relatively new at funding early-stage startups’

She said investing in early-stage startups is a relatively new area for Finca International. “We made our first investments in BioLite and Amped Innovation in 2017 and have grown the portfolio to six companies since then,” she said.

Some of the African social enterprise startups and companies that Finca has backed include Kenyan edtech Eneza Education, Good Nature Agro from Zambia and Sanivation from Kenya.

Finca Ventures makes seed or Series-A investments of between $50 000 and $500 000, with additional capital reserved for follow-on funding.

“To date, Finca Ventures has deployed about $1-million in capital and is looking to actively grow the portfolio,” stated Dalal.

She said the impact investor is looking to invest in early-stage African startups in the energy, water, sanitation and hygiene sectors; health; and agriculture sector.

To qualify for funding, startups, she said, must have a clear value proposition as to why and how they will leverage the Finca network to deliver enduring social impact.

She called on interested startups to learn more about the impact investor’s investment criteria on its website.

‘Meaningful post-investment support’

Dalal said Finca Ventures “works closely” with investees to provide meaningful post-investment support.

This, she explained, includes offering strategic guidance around entering new markets, connections to potential customers for feedback on product design or go-to market strategy, fundraising and business support, talent, and hiring assistance, as well as access to its networks.

“Additionally, we try to bring Finca-specific value to our portfolio. As a global organisation, we have talent within our own walls that can help with marketing and communications, finance and legal, or research and monitoring and evaluation, tailor-made for companies operating in the African markets we’ve been serving for roughly 30 years

“Further, where logical, we work hard to operationalise strategic partnerships between our investees and the microfinance network.

Said Dalal: “We hope this will result in both creating new financial products for the customers of our investees, as well as getting the products of our investees into the hands of the existing Finca customer base”.

Featured image: FINCA Ventures managing director Ami Dalal (Supplied)