“3 questions to” Agnès Huang, investment officer for the Accion venture lab (AVL) project

1. What type of seed fund is Accion Venture Lab (AVL) and what are its targets?

It is a global fund that mainly operates in Brazil, Mexico, India, South Africa, Kenya and Indonesia. It is led by the NGO Accion and finances companies specialized in fintechs, whose activity improves the quality and accessibility of financial services and/or reduces the cost for the most disadvantaged populations. The fund’s target markets are characterized by a lack of access to basic financial services, where the emergence of fintechs is also structural for the development of financial inclusion. 

As a seed fund, AVL intervenes at the beginning of the life of companies. The fund operates as the first institutional investor in these start-ups, which allows them to become more professional and strengthen their shareholding structure. These start-ups are at a stage of development where they have validated and proved their business model on the basis of a prototype. They are initially seeking to put their product on the market then to scale up.

2. hat does PROPARCO’S equity investment involve?

PROPARCO invested USD 2m in AVL in July 2019, alongside other development institutions such as FMO and Triodos. This investment is supporting a player that is world renowned for its expertise in the fintech sector and targets start-ups that PROPARCO could not directly finance.

3. What are the expected impacts of this equity investment?

AVL operates in the riskiest venture capital segment where resources are lacking the most, especially in developing countries. The fund therefore contributes to the creation of local start-ups that are structural for development. As AVL targets financial inclusion, this project aims to improve access to basic financial services for the most disadvantaged populations, either by reducing access costs, or by developing or strengthening a high-quality range of services.

The value creation of AVL includes three categories: technical assistance, governance and assistance in raising financing. AVL is more than a provider of capital, it gives close support to very young companies that are in the process of proving their concept and generally generate little or no revenues. The fund makes its expertise and network available, under technical assistance programs, to allow these start-ups to develop in line with international best practices and standards.

The emergence of players like AVL is essential for building ecosystems conducive to innovation and for building the economies of tomorrow in the target countries. The start-ups financed by AVL will create quality jobs offering better prospects to the new generation of young graduates who sometimes have difficulty finding a job. In terms of sustainable development, the project will contribute to SDG 1 (End poverty), SDG 5 (Gender equality and women’s economic empowerment), SDG 8 (Promote economic growth and employment) and SDG 10 (Reduced inequalities).