The Brief | March 5, 2020

The Brief: Quona’s fund for inclusive fintech, payments in Colombia, skills training in India, accelerating solutions finance, the Netherlands’ impact scene

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Greetings, Agents of Impact!

Featured: ImpactAlpha Original

Quona focuses on customers with $203 million fund for inclusive fintech in emerging markets. Quality may trump quantity in the race to deliver financial services to the world’s billions of unbanked households. The push to scale as fast as possible is causing yellow lights to flash in the emerging markets fintech boom. In Kenya and other markets, some customers are falling into “debt traps,” as easy, mobile credit becomes available from competing digital lenders. Quona Capital is doubling down on the thesis that responsible, customer-centric services that deliver real development gains for communities will outperform in the long run. Quona closed its Accion Quona Inclusion Fund at $203 million. It’s the second fund for the Washington, D.C.-based spinoff of nonprofit Accion International. “We are a proponent of the belief that there are impact-generating activities that also can earn a financial return,” says Quona’s Monica Brand Engel, who incubated the firm inside Accion. The key, she says, is to find companies that serve customers, not take advantage of them.

The new fund attracted investment from Prudential Financial, Mastercard and Ford Foundation, among other institutional investors. Accion, the fund’s sponsor, anchored the new fund, though with a smaller investment than it made in the earlier $144 million Accion Frontier Inclusion Fund. They wanted to “crowd in the private sector,” says Engel. “That’s exactly what’s happened.” Quona’s impact lens aims to expand access to finance and protect underserved consumers – and mitigate business risk as well. Quona has stayed away from the market for unsecured consumer loans in favor of products such as insurance, small business lending and payments. “There are higher value-add financial service products that can really move the needle for the underserved or the unbanked,” she says. “There are a lot of areas in fintech where we think there’s less opportunity for abuse.” The new fund has made nine investments, including in Sokowatch, an e-commerce platform serving informal businesses across East Africa.

Keep reading, “Quona focuses on customers with $203 million fund for inclusive fintech in emerging markets,” by Dennis Price on ImpactAlpha.

Dealflow: Follow the Money

Adobe Capital backs Colombian fintech Puntored. Puntored raised $6 million to expand its network of cashpoints for withdrawing cash and making electronic payments. Adobe’s Paula Giraldo told Crowdfund Insider that Latin American fintechs have attracted a hefty volume of venture capital but few impact investors that can anchor strategies for social inclusion and economic development.

Media Development Investment Fund invests in social tech startup Josh Talks. Josh Talks is a local-language skills platform that aims to help young, low-income Indians with career guidance and training, including English lessons, financial literacy and personality development. MDIF backed the Gurgaon-based company with an undisclosed amount of funding.

McConnell Foundation aims to accelerate ‘solutions finance.’ The Montreal-based foundation aims to develop financial intermediaries’ capacity to launch and scale new impact finance models. The nine participants in the 2020 cohort include Fair Finance Fund, which is focused on loans and mentorship in the food chain; New Market Funds, which operates a fund to capitalize indigenous financial institutions; and Chantier de l’Économie sociale, which is building a pipeline of community development bonds.

Signals: Ahead of the Curve

Dutch impact investing ecosystem matures and diversifies. With its €40 million first fund, Social Impact Ventures has played an influential role in building the Dutch impact ecosystem. The firm, now raising a targeted €80 million second fund, aims to play an even bigger role in bridging the early-stage capital gap for impact startups in the Netherlands. “We’ve seen the growth of young ventures in our pipeline, and we can easily double what we’ve done in the last four years because we now have a developed pipeline,” Social Impact Ventures’ Willemijn Verloop tells ImpactAlpha. The Amsterdam-based firm’s approach of linking its carry, or share of profits, has been adopted by The Wire Group and other Dutch impact fund managers. When FinCo Fuels Group bought out Social Impact Ventures’ stake in biofuels company GoodFuels, the gasoline retailer committed in deal documents to continue tracking Social Impact Ventures’ impact metrics. Social Impact Ventures has backed 13 early-stage social enterprises in the Netherlands with investments ranging from €500,000 to €4 million, with two exits. Other Dutch impact investors are crowding in:

  • Think locally. The portfolio of Inclusif Social Capital’s blended-finance fund includes pay-for-success initiatives focusing on veterans and asylum seekers in the Netherlands. 4impact’s early-stage impact fund backs Dutch social software companies. Waterman Ventures focuses on mission-driven life sciences and energy companies. Triodos Investment Management enables Dutch retail investors to invest for impact. Amsterdam has its own student fundASIF Ventures, which invests in Dutch student- and graduate-led social ventures. The Hague’s ImpactCity initiative aims to recruit international startups and “scale-ups” to launch and expand in the city.
  • Act globally. Private Dutch funds driving emerging-markets impact deals include Goodwell Investments, which is looking to invest €100 million in social enterprises in Africa. C4D Partners invests to empower Asia’s small businesses. Oikocredit is an emerging markets impact lender. Impact investing network Pymwymic invests in funds and early-stage impact ventures globally. The Netherlands’ development bank, FMO, anchors numerous impact funds investing in emerging markets. Dutch government-backed Dutch Good Growth Fund, managed by Triple Jump, is a key capital source for emerging markets impact fund managers. The second largest agricultural exporter in the world is also home to a number of food-focused impact funds, including aquaculture fund Aqua-Spark, Rockstart Agrifood, Hivos Food and Lifestyle Fund and Rabobank’s new €80 million sustainable agriculture initiative.
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Agents of Impact: Follow the Talent

The Skoll Foundation canceled this month’s Skoll World Forum because of the spreading coronavirus. “I know we will come back together next year the way we always do, ever more resolute in our collective desire for a sustainable world of peace and prosperity for all,” writes billionaire Jeff Skoll (see, What is impact investing without conferences? We may be about to find out”)… Upaya Social Ventures canceled its Mar. 6 fundraising gala and will host a virtual gala instead… Sophie Robé is stepping down as CEO of Phenix Capital. Phenix’s Dirk Meuleman will take the helm… Aceli Africa seeks an associate/financial analyst in Nairobi… Boundless Impact Investing is looking for a sustainable aquaculture expert in the U.S.

Thank you for reading.

–Mar. 5, 2020