ImpactAlpha, Sept. 4 – Accion was early to “fintech” when it launched its $10 million Venture Lab investing initiative in 2012. Since then, digital and mobile financial services have exploded, attracting $37 billion in venture capital last year.
But the need for early-stage capital has only increased among emerging-market fintech companies creating affordable and transparent products for low-income customers.
Now, Accion Venture Lab has closed a second fund of $33 million, including $23 million from a roster of investors that included Dutch development bank FMO, Ford Foundation, MetLife Foundation, Visa and Prudential Financial. Accion is investing another $10 million of its own capital.
“Seed stage continues to be where we see the biggest capital gap, even in impact investing,” Accion Venture Lab’s Tahira Dosani told ImpactAlpha. Some entrepreneurs survive until they can raise institutional capital by bootstrapping with revenues or relying on friends and family, Dosani said. “But some innovative models die on the vine because they can’t get that first institutional money in the door.”
Accion Venture Lab has invested in 36 companies and has exited Mexico’s Clip as well as Aye Finance and Varthana in India.
Many startups offer seemingly similar solutions in the increasingly crowded fintech market, Accion Venture Lab’s focus on impact-first companies helps the organization cut through the noise.
“We screen first for impact, and if we don’t see that, we don’t even get into the business diligence,” she said. “That avoids us thinking about tradeoffs.” Competition for customers is growing in emerging markets, but is still less intense than in the U.S. and Europe, Dosani observed.
The new fund made its first investment in August, backing U.S.-based Joust, which offers financial services tailored to gig economy workers. Dosani expects to make a total of 25 to 30 new investments, and to commit most of the capital to emerging markets startups.