Accion, a non-profit organization focusing on creating a fair and inclusive economy, has announced launching the Accion Digital Transformation Fund.
The $152.5 million fund, which launched on Tuesday, May 14, 2024, will be used to provide growth capital and strategic support to large financial institutions like microfinance banks, prioritizing underserved small businesses in Africa and other regions.
Limited partners in the fund include British International Investment (BII), Dutch entrepreneurial development bank FMO, IDB Invest, International Finance Corporation (IFC), Mastercard, OeEB the Development Bank of Austria, and Swedfund.
Speaking about the fund with one publication, Abhishek Agrawal, Managing Partner at Accion Digital Transformation Fund, said Accion realized from working on financial inclusion over the years that many people have been neglected by traditional financial institutions in rural parts of the world.
“And the challenge was twofold. One is because rural customers or digitally late customers don’t have enough trust in digital technology. And then the second piece of it was the institutions (traditional banks and financial services institutions), not having enough knowledge about or having enough support internally to invest in real digital customer engagement,” Agrawal explained.
Agrawal noted that as a way to bridge the gap, the fund will support companies serving micro, small, and medium enterprises (MSMEs) across Africa, South and Southeast Asia, and Latin America.
“Our preference in this case would be traditional microfinance, affordable housing companies, and microfinance institutions converting to banks.”
The company plans to disburse the fund through equity investments of between $12 million to $15 million coupled with contributions from its limited partners.
The new fund will be making entirely new investments in 10 to 12 traditional financial companies and won’t make follow-on investments in fintechs from the Venture Lab.
5 years ago, Accion launched the Accion Venture Lab, a $23 million inclusive fintech startup fund, venturing into early-stage fintech investment to provide seed-first and strategic support to innovative companies.
To date, Accion Venture Lab has funded over 65 seed-stage and Series A startups in more than 30 nations in Africa and other regions.
Notable investments in Africa include Apollo Agriculture, a Kenyan-born tech-enabled smallholder agriculture financing company; Lulalend, a South African digital lender for MSMEs; and Khazna, an Egypt-based mobile banking solution providing credit, savings, and debit cards.
Accion Impact Management manages the Accion Digital Transformation Fund and the Accion Venture Lab.
Accion Emerge, a fund that backs growth-stage companies in embedded finance, agritech, and the future of work is Accion’s other investment initiative.
