Future of Investing, Podcasts
How the Accion Venture Lab’s Vikas Raj invests in the next generation of inclusive financial services firms
- Accion Venture Lab is a seed-stage investor in startups focused on financial inclusion.
- Vikas Raj joins us on the podcast to discuss the firm's mandate and portfolio.

Many of our listeners might be familiar with Accion, the global non profit that uses digital technology to create a more financially inclusive world. Accion was founded in the 60s and has roots in microfinance.
Fewer people know that Accion has a venture arm. Accion Venture Lab invests capital and provides support to innovative fintech startups with a mandate to improve access, quality, and affordability of financial services for the underserved at scale.
Vikas Raj is a managing director at Accion Venture Lab and sits on the board of companies like Konfio, Self Lender, StreetShares, and Tienda Pago. We talk about his approach to seed investing with a social impact and certain trends that cut through Accion Venture Lab's portfolio.
Vikas also hosts a podcast for Venture Lab entitled VentureKast about the cool financial inclusion startups around the world and the entrepreneurs who build and grow them.
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The following excerpts were edited for clarity.
Accion and Accion Venture Labs' mandates
Accion Venture Lab is the seed stage investor within Accion, a global financial services not-for-profit that's been around for almost 60 years. It's been really active during this period in financial inclusion. What Venture Lab really does is provide capital to seed stage enterprises around the world. innovating in financial services to incorporate the poor within the financial system.
Historically, we have invested as part of Accion and have invested off the firm's balance sheet. We're in the process of raising outside capital and encouraging others to join us in this mission.
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Vikas Raj, Accion Venture Lab[/caption]
We tend to be the first institutional capital in our portfolio companies, typically investing $400,000 to $500,000. These companies generally have a product in market, have a full time team in place, and have started generating revenues to show some type of product-market fit.
But they haven't started scaling and have a lot more to prove. We come in as the first institutional capital, bringing them the money to experiment and scale, but also to formalize and institutionalize the businesses. We've found that these companies need more than money. They need support to create the right type of governance and compliance and help to solve operational and strategic issues so that they're more palatable to later stage investors.
We invest all over the world. We've invested in companies operating in 30 countries, primarily in Asia, Africa, Latin America, and the U.S.
Why Venture Lab exists
There are three billion people in the world living in or near poverty. Many of these people have poor or no access to financial services. According to the World Bank, about 1.7 billion people don't have access to financial services of any kind -- the rest don't have access to full set of tools they need to live their best lives.
A lot of things we take for granted in financial services, these people don't have access to. They can't deal with emergencies, make the most of opportunities, don't have money to grow their businesses, save their money under their mattresses, and don't have insurance products to protect their families. It's a problem everywhere in the world. While there's been real innovation in things like microfinance, there's still a massive gap.
Inclusion themes in the Venture Lab portfolio
The good news is that financial technology can bridge that delta. In some markets, the penetration of technology has far outstripped the penetration of financial services. It's clear you can actually leverage technology access where financial services access doesn't exist to identify, understand, and serve consumers historically ignored by the financial system.
Our view is that the real innovation in financial inclusion is happening in startups. They're built to build real solutions. They're user-centric and don't have the fixed cost and bureaucracy that keeps incumbents from serving this group. These startups have been ignored by institutional capital for the most part -- less than 1 percent of impact capital is going to seed-stage, social impact startups.
Venture Lab exists really to identify and support -- through capital and post-investment support -- that set of innovators figuring out how to incorporate the poor into the financial system. We do it across products and markets. We're investing in savings, payments, credit, insurance and remittance businesses.
Product development for this community
These companies aren't just selling the same product to new customers. They need to make sure the way it's designed, communicated, how the consumer is educated -- it all needs to evolve to be able to serve this customer.
I'll give you an example. We have an insurance company in India called Toffee. It's called Toffee because they offer bite-sized insurance, a product that's affordable, covers a limited set of outcomes and is integrated into processes the customer is already going through. One type of insurance they offer is commuter insurance to bike owners. It's micro-insurance, sold through bike sellers around the country, and covers specific cases.
Companies in the Venture Lab portfolio
We have a company in East Africa called Apollo. It provides input finance to small farmers. Apollo essentially funds seed and fertilizer for a season and recoups it after. The reason they can serve a customer that hasn't been served before is the way they think of underwriting. They use all kinds of information from small satellites to understand the quality of a farmer's land. They have tech-enabled freelance loan officers to check land physically. Apollo also uses M-Pesa to enable farmers to pay back their loans in small bits over time.
We have a different type of company in Peru and Mexico. TiendaPago provides inventory finance to small merchants that haven't had access to capital before. TiendaPago has partnered with FMCG distributors to provide credit immediately at the point of distribution. If I'm a small merchant in Lima, I can activate a TiendaPago account, purchase inventory on credit, and repay in 1 week or 2 weeks. Merchants are driving revenue increases of 10 and 20 percent. Distributors love it, too. because they're taking cash out of the system and making more profit.
