Accion has launched a $10 million venture lab to provide seed capital to startups worldwide, the microfinance company announced Tuesday. Accion said it will focus on companies who have completed research and development and are at the pilot and/or first-revenue stage. Investments will range from $100,000 to $300,000, and will be structured either as convertible debt or equity.
Accion, a pioneer and leader in global microfinance, today announced the launch of Venture Lab, an initiative dedicated to providing seed capital and management support to financial inclusion start-ups worldwide.
The $10 million program will seek out companies that have completed research and development and are at the pilot/first-revenue stage. Investments will typically be in the range of US $100,000-$300,000, invested either as convertible debt or equity.
“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 scale of financial services available to the world’s un- and under-banked.”
Seeking approximately 20 investments over the next three years, Venture Lab will focus primarily in the following areas:
Mobile financial services: Mobile phone-based financial services or business models built on branchless banking platforms, delivering services that include savings accounts, remittances, credit, and micro-insurance.
Credit underwriting/delivery: Specialized credit assessment or delivery models to finance not only microenterprises, but also housing, education, SME, and energy initiatives.
Internet and social media: Online or social media platforms for enabling financial access (e.g., peer-to-peer lending and social media-based financial services).
Embedded financial services: Pay-as-you-go or lease-to-own energy products, modular housing and other ‘embedded’ financial-service models.
New technology for BOP finance: Taking advantage of new technology innovations (cloud computing, SaaS, Internet access, handhelds/tablets) to improve the reach, cost, or quality of financial services to underserved customers, including customer relationship management, field force management, marketing/customer education, and analytics.
Geographically, Venture Lab’s mandate is global. Preliminary research has focused largely on companies in East Africa and South Asia. In the coming months, Latin America will also be a focal point.
Venture Lab will seek to support start-ups at a vital stage when they are normally considered ‘pre-investable’ – that is, when a product or service is ready to test the market but has not yet proved its ability to generate revenue. The Lab will provide not only patient capital, but also a dedicated team ready to assist with early-stage tasks such as path-to-scale strategy, analytics, financial modeling, and business development.
The Lab’s technical assistance will leverage Accion’s technical capacity, its global network of microfinance institutions, and relationships in the global microfinance and mainstream financial industries, to help build an entrepreneurial ecosystem in which portfolio companies can thrive.
The Lab will be directed by Paul Breloff out of Accion’s Washington, D.C. offices, with staff to be based in East Africa and India.
Venture Lab complements Accion’s Frontier Investments Group, which focuses on similarly disruptive but more established companies with demonstrated revenue traction. Both investment vehicles are part of 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.
Accion is a global nonprofit dedicated to building a financially inclusive world, with access to economic opportunity for all, by giving people the financial tools they need to improve their lives. A world pioneer in microfinance, over the last 50 years we have helped build 62 microfinance institutions in 31 countries on four continents. Those institutions are currently reaching millions of clients. The Accion U.S. Network is the largest microfinance network in the country and, since inception, has served hundreds of thousands of clients with loans and support.