Financial Inclusion | March 16, 2023

Accion Venture Lab bets on ‘embedded finance’ in India, Pakistan and Indonesia

Jessica Pothering
ImpactAlpha Editor

Jessica Pothering

ImpactAlpha, March 16 – Lack of access to finance is a critical barrier to small business growth – and thus, to economic growth and job growth – in many emerging markets. Companies that support micro and small businesses in other ways, like inventory supply and logistics, are using their distribution power to extend complementary financial services.

One such example of “embedded finance” is Magma in India, which helps small and mid-sized manufacturers finance and procure raw materials, and connects them to buyers. The company is among the latest crop of investments by inclusive fintech VC investor Accion Venture Lab.

Accion Venture Lab also backed Indonesia’s Semaai, which operates a digital marketplace and lends to small agricultural suppliers. In Pakistan, Trukkr is providing financial services to small trucking companies.

Despite economic volatility, “these are such essential services that we know businesses will continue to have these needs,” Accion Venture Lab’s Amee Parbhoo told ImpactAlpha.

Embedded finance is where Accion Venture Lab sees an opportunity to move the needle on small business financial inclusion. “We’re seeing a range of new revenue models and lending partnerships stemming from the power of embedded finance,” said Parbhoo.

Some, like Trukkr, are raising debt to lend off their own balance sheets. Others are partnering with larger financial institutions.

“These companies have data and supply-chain relationships that are giving more comfort to lenders” that wouldn’t otherwise lend to such businesses, Parbhoo said.