A new seed capital provider, Venture Lab, was recently launched in an effort to support financial inclusion start-ups around the world. Backed by social investor Accion, and with initial funding available up to $10 million, Venture Lab will provide convertible debt or equity worth $100,000 – $300,000 in approximately 20 companies, which are at the pilot or first-revenue stage. Venture Lab aims to make these investments over the next three years, with the intention of identifying and investing in transformative business models, which can help rapidly scale and transform the quality of financial services available to those who do not currently have adequate access to financial services. Venture Lab will initially focus on India and East Africa, and will focus on a range of financial services such as branchless banking, credit underwriting, and internet and social media platforms to facilitate financial access for the bottom of the pyramid.
BY MADHAV A. CHANCHANI
Initial focus will be on India and East Africa; to back financial inclusion startups with $100K-$300K.
Social sector investor Accion has launched Venture Lab, an initiative to provide seed capital and management support to financial inclusion startups worldwide. Accion’s Venture Lab will initially look at investments in India and East Africa, and will add Latin America in the coming months.
The programme has an outlay of $10 million from which it will invest $100,000-$300,000 in companies which have completed R&D and are at the pilot/first-revenue stage. The funding will be done in the form of convertible debt or equity. The platform is looking to make around 20 investments over the next three years.
Accion has been an active investor in India and most recently backed Bangalore-based BPO Vindhya e-Infomedia, along with Michael & Susan Dell Foundation. It had also invested in microfinance firms like Swadhaar and Saija Finance, besides backing social sector funds as a Limited Partner.
“There is tremendous ferment and promise across the globe in efforts to deliver vital financial services to those who have traditionally lacked access,” said Michael Schlein, Accion president and CEO. “Venture Lab will seek out companies developing game-changing technologies and disruptive business models with the potential to transform the quality and the scale of financial services available to the world’s unbanked and under-banked.”
Venture Lab will focus on mobile financial services including business models built on branchless banking platforms; delivery of services spanning savings accounts, remittances, credit and micro-insurance; credit underwriting/delivery including specialised credit assessment to microenterprises, housing, education, SME and energy initiatives; Internet and social media platforms for enabling financial access; embedded financial services and new technology for BOP finance.
Besides funding, Venture Lab will also have a dedicated team for assisting startups with path-to-scale strategy, analytics, financial modelling, and business development.
The Lab’s technical assistance will leverage Accion’s tech capacity, its global network of microfinance institutions and its relationships across the global microfinance and mainstream financial industries, to help build an entrepreneurial ecosystem in which the portfolio companies can thrive.
Venture Lab will be headed by Paul Breloff, based in Washington, D.C., who will have teams in East Africa and India.
Interestingly, Venture Lab complements Accion’s Frontier Investments Group, which focuses on similarly disruptive but more established companies with demonstrated revenue tractions. Both investment vehicles are part of the ongoing efforts by Accion to explore innovative business models that will radically improve the efficiency and enhance the quality of financial service delivery to the unbanked.