Accion Venture Lab (Case Narrative)

Abstract

innovations / volume 10, number 1-2 © 2015 Paul Breloff Paul Breloff is the founding Managing Director of the Accion Venture Lab. Accion Venture Lab, launched in 2012, is a seed-stage impact investment initiative that provides small amounts of capital (up to $500,000) and management support to jumpstart game-changing financial inclusion startups around the world, promoting better financial services to more people at the base of the pyramid (BOP). Lack of financial access is a massive global problem. At Accion we believe, and the research shows, that the right financial tools can make or break whether someone will be able to take advantage of an opportunity (e.g., invest at the right time to grow a business) or absorb a financial shock (e.g., pay for an emergency medical procedure without spiraling into debt). According to the World Bank’s Global Findex Database 2014, roughly two billion people around the world lack access to formal financial services. Our efforts address this widespread issue by helping to provide access to financial tools that help underserved customers—particularly low-income customers and small business owners—improve their lives. A reliable place to borrow and save, for example, can help a household manage uneven cash flow, smooth consumption, and build working capital; insurance can help mitigate risk and manage shocks; new types of payment services can help reduce transaction costs and keep money with families, rather than big money transfer organizations. Evidence also shows that financial inclusion is positively correlated with growth and employment at the macro level. Venture Lab is an in-house, strategic venture capital arm of Accion, a financial inclusion nonprofit organization headquartered in the United States, with offices in Colombia, Ghana, and India, and with 200 staff members around the globe. Although this strategic, in-house venture capital model is common among mainstream banks (e.g., Citi Ventures, American Express Ventures), it remains uncommon among nonprofits, which rarely have the resources to foot the bill for exploratory investment arms. Venture Lab’s purpose is to spur innovation in financial inclusion, specifically innovation led by the earliest and most unproven startups. We believe that market incumbents— the big banks, credit card companies, and remittance players—need a healthy dose of inspiration or perhaps fear from a new breed of entrepreneurs poised to shake up the status quo in global finance. Accion Venture Lab Paul Breloff