Global social investor Accion has announced a set of five initial investments by Venture Lab, its $10 million seed capital initiative, including one investment in Bangalore-headquartered Varthana, a non-banking finance company that provides loans to affordable private schools. Accion launched Venture Lab in April 2012.
Varthana provides loans and support to affordable private schools that cater to the poor and the emerging middle class. Although the exact quantum of investment was not disclosed, Venture Lab typically provides capital in the range of $100,000-$500,000 (Rs 54 lakh-Rs 2.7 crore), invested either as convertible debt or equity for supporting seed-stage enterprises.
It seeks to invest in firms involved in the financial inclusion space.
Venture Lab’s investments primarily focus on areas like mobile financial services, credit underwriting and delivery, internet and social media, embedded financial services and new technology for bottom-of-the-pyramid finance.
“Startups and new entrants are poised to drive innovation and reinvent the ways in which we reach the global underserved,†said Paul Breloff, Venture Lab’s managing director. “Each of our new investments offers the promise of transforming ‘business as usual’ and of expanding broader financial services for the base of the socio-economic pyramid.â€
Among the other four investments of Venture Lab, there is Singapore-headquartered Coda Payments, which is currently operating in Indonesia. It has built a transaction processing platform that makes it easier for customers to buy goods and services using prepaid mobile accounts, providing those people who lack access to credit/debit cards a way to purchase digital goods including e-content, job listings, information services and microinsurance policies.
Another company that has raised money is Hong Kong-based DemystData that helps financial institutions tap into the growth of online, social and internal Big Data to make better customer decisions (particularly for the purpose of credit assessment) or to improve financial services delivery to underserved customers.
Venture Lab has also backed PayClip. Headquartered in San Francisco and Mexico, it is a payments company that enables a broader range of merchants to accept credit, debit and other types of cards, using a smart phone plug-in and a sophisticated risk-management system.
The last firm which has got funding is Salud Facil, headquartered and operating in Mexico. It provides low-income customers access to affordable credit to cover their healthcare and medical costs, thus addressing the need for quality and affordable care in a market where few people have access to traditional health insurance.
Venture Lab complements Accion’s Frontier Investments Group, which focuses on more established but similarly disruptive companies with demonstrated revenue traction. Both investment vehicles are part of Accion’s ongoing efforts to explore innovative business models focused on financial service delivery to the under-banked.
Last year, Frontier Investments Group, along with Saama Capital (an India venture-focused investment firm), invested $4 million as part of an $8 million investment commitment into Gurgaon-based NBFC Shubham Housing Development Finance Company.
In its roadmap for Asia, Accion has listed several plans for India where more impact investments and micro-credit standardisation programmes are expected.
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(Edited by Sanghamitra Mandal)