The new new thing in Silicon Valley? Global development.
The latest data point: Venture capital powerhouse Andreessen-Horowitz's investment in Branch, its first in a U.S.-based company targeting the Africa market. Branch has closed a $9.2 million series A round that also includes earlier investors Formation 8 and the Khosla Impact Fund.
Andreessen-Horowitz is betting on Matt Flannery, who as co-founder of Kiva.org, helped prove that millions of people would make small loans to help alleviate poverty around the world.
With his new for-profit startup, Flannery is showing skeptical investors the potential to bring digital financial services to unbanked millions in emerging markets.
“Lots of entrepreneurs try to do things with financial services for un-banked or under-banked people in the U.S. and Western Europe, but this need is nowhere near what it is in the developing world,” Alex Rampell of Andreessen Horowitz told TechCrunch. It was Rampell's first transaction since becoming a general partner at the VC firm.
Andreessen Horowitz's co-founder, Marc Andreessen, is of course known as a key author of the first Web browser and co-founder of Netscape, perhaps the original New New Thing in Silicon Valley.
He has been a skeptic around social-impact investing, in particular so-called “B Corps,” which declare specific social missions alongside their financial forecasts. “The split model makes me nervous and I don’t think we would ever touch that,” Andreessen once famously declared. “It’s like a houseboat. It’s not a great house and not a great boat.”
Now, Africa, and the developing world more broadly, is increasingly on the radar of venture capitalists. Last month Union Square Venture's Fred Wilson called the developing world “the next whitespace for venture capital,” pointing to the 2.5 billion people poised to adopt smartphones by 2020. This, says Wilson, will unlock massive demand for essential services, including financial services, that customers in these markets have not been receiving from either the web or from the offline world.
“Our service is already reaching the middle class in Kenya,” Flannery told TechCrunch, “But I’m building this with the intention that it will serve everyone much the way that Twitter started out as a thing that people used at South by Southwest, but ended up playing a big role in the Arab Spring.”