Accion Venture Lab to invest at least $4.5m in African fintechs with new fund

Accion Venture Lab, the seed investment initiative of US-based non-profit Accion, has launched a new $23-million fund aimed at fintech startups that focus on financial inclusion.

The seed investment initiative announced the launch of the new fund today in a statement on its website.

The fund will invest between 20% and 30% ($4.5-million to $7-million) of this capital in emerging markets in Africa, Accion senior director of engagement Katie Mounts revealed to Ventureburn in an email earlier today.

Accion Venture Lab typically invests between $300 000 and $500 000 in seed-stage startups, with the possibility of investing further follow-on funding.

Accion Ventue Lab investment officer Ashley Lewis said the investment initiative plans to explore opportunities across the continent. “To date, Accion Venture Lab has made investments in Nigeria, South Africa, and Kenya, and we plan to expand our presence with this new capital,” said Lewis.

Mounts told Ventureburn that with the launch of the fund Accion Venture Lab had leveraged third-party capital for the first time.

Investors involved in the fund include: the Dutch entrepreneurial development bank (FMO), the Ford Foundation, ImpactAssets Giving Fund of Blue Haven Initiative, the Heifer Foundation, the MetLife Foundation, Open Society Foundations, Pace Able Foundation, Proparco, Prudential Financial, Stichting Hivos-Triodos Fund and Visa.

Accion Venture Lab now has $43-million in total capital under its management

In addition, Accion also announced a separate $10-million investment in its seed investment initiative.

This, it pointed out in its statement, brings the total capital under Accion Venture Lab’s management to $43-million — about four times the $10-million under its management when the organisation launched in 2012.

Mounts said the new fund will have a “significant impact” on its work in the region.

The seed investment initiative funds fintech startups that leverage technology to increase the reach, quality, and affordability of financial services for the under-served at scale.

These include insurtech, agricultural finance, digital lending, small business finance solutions, and personal financial management.

The financial impact investor’s portfolio includes SA startups Lulalend and Lumkani, Nigerian fintech Lidya as well as Kenyan startups Apollo Agriculture, Kopo Kopo and Pula.

Accion Venture Lab said in its statement that its portfolio companies ultimately support entrepreneurship, resilience in farming, gig economy and migrant workers, healthcare, transportation and education.

It added that for every dollar the organisation has invested, its portfolio companies have raised an additional $13 in equity capital from later-stage investors.

Accion president and CEO Michael Schlein said despite this progress, three billion people still have no safe or simple way to save money, get a loan or 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 under-served people.

“Yet often startups lack the capital and strategic support they need to grow and scale their impact. Accion Venture Lab addresses this need,” added Schlein.

Accion Venture Lab managing director Tahira Dosani said the division was seeing substantial growth in the amount of investment capital available for fintech startups from what it saw when the investment initiative was launched in 2012.

“But money isn’t enough,” stressed 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 under-served build better lives.

Accion Venture Lab MD Vikas Raj pointed out that there is “strong potential” for inclusive fintech startups to reach historically under-served communities while generating returns.

Raj added that the over-subscription of the Accion Venture Lab fund is great validation of its early work investing in more than 40 innovative businesses operating in 30 markets.

“This new pool of capital enables us to scale our efforts and remain at the forefront of seed stage investing in inclusive fintech,” said Raj.

Earlier this year, Accion Venture Lab launched the second edition of its Company Builder programme through which it works with entrepreneurs to develop inclusive fintech solutions for under-banked consumers in Nigeria (see this story).

Read more: Accion Venture Lab launches second edition of Company Builder programme
Read more: Nigerian fintech Lidya raises $6.9m in Series-A round led by Omidyar Network [Updated]
Read more: LulaLend raises new round of funding from Accion Venture Lab

Featured image: Apollo Agriculture client in Kenya (Accion via Facebook)

Editor’s note (5 Sept 2019): The article has been updated to include comments by Accion Ventue Lab investment officer Ashley Lewis on which African countries the fund will focus on.