FINCA International Launches FINCA Ventures, an Impact Investing Initiative
Providing patient capital and support to early-stage social enterprises serving the base of the pyramid (BoP)
FINCA International is announcing the launch of FINCA Ventures, an impact investing platform that provides patient capital and pre- and post-investment support to help early-stage social enterprises achieve growth and scale. Through FINCA Ventures, FINCA International supports innovative solutions to poverty in energy, water-sanitation-hygiene (WASH), education, health, agriculture and financial technology (fintech).
Well, the journey had to begin somewhere, and for us that “somewhere” was two to three years ago. We were speaking with social entrepreneurs about the holes in today’s ecosystem for launching commercially-minded and socially-oriented businesses. Talk of the “pioneer gap” — the gap in financial support between the very early and later stages of social enterprise growth — dominated the conversation. We walked away thinking we need to do something about this.
Like any idea worth pursuing, the thought lingered. Doing something to address the pioneer gap in funding and support for social ventures was not so far-fetched for us after all. Why? Because meaningful access to basic services requires access to finance. With more than 30 years of experience providing the BoP market with access to responsible finance, we thought we could distinctively contribute to accelerating these solutions by helping determined entrepreneurs.
Today, a growing number of social enterprises are developing life-changing solutions to meet the basic service needs of low-income families in developing economies. From solar-powered appliances that help folks generate income, to human waste-to-energy sanitation approaches, the world’s emerging markets are being disrupted for the better. However, for these solutions to truly take hold, they need the resources to grow.
Unfortunately, many of these early-stage ventures struggle to get their products and services into the hands and homes of those who need them most, or to successfully scale their businesses to reach even more of the world’s poor. Limited investment capital, insufficient distribution networks, low awareness or customer trust, and lack of end-user financing all contribute to the pioneer gap. As a pioneer in microfinance — the original social enterprise — we believe that our local experience and market intelligence uniquely position us to help social enterprises grow faster and smarter, and to reach a BoP market more effectively and responsibly.
FINCA Ventures seeks to invest in daring and sustainable market-based solutions that will help catalyze economic growth and eradicate global poverty in this generation. We’re interested in proving the commercial viability and social impact of enterprises pioneering new models of inclusive business. That’s why we’re investing in transformational ideas and partnering with the uncompromisingly ambitious — to meet the financial and basic service needs of low-income families globally.
Over the past 18 months, FINCA Ventures has invested in six early-stage social enterprises serving the BoP:
- Amped Innovation: Designs solar home systems and DC-powered productive use appliances to help those living under $4 per day grow their wallets.
- BioLite: Designs and manufactures clean-burning, electricity-generating cookstoves and solar home systems for off-grid households.
- Eneza Education: Develops hardware-agnostic digital educational curriculums that work on basic feature phones, smartphones and tablets for K-12 students and beyond.
- Good Nature Agro: Partners with smallholder farmers to improve their productivity through soil-enriching legume farming and links them to a high-value legume seed market to grow farmer incomes.
- Ignitia: Sends hyper-local, highly accurate tropical weather forecasts to smallholder farmers via SMS to reduce risk and loss for better harvests.
- Sanivation: Provides waste-to-energy sanitation services to local governments and refugee camps, turning fecal sludge into environmentally-friendly fuel alternatives to charcoal and firewood.
We’ll be talking more about how social entrepreneurs are transforming underserved markets around the world, and how we leverage the FINCA network to provide them with meaningful support to grow better and faster. Our intent is to use this Medium page to share our latest investments, news and updates on our portfolio companies, industry or sector insights, investment strategies and lessons learned, and other commentary on the intersection of impact investing and social enterprise in emerging markets. We also seek to spur a conversation with others in the social venture space to exchange insights and perspectives.
With this new endeavor, we are going beyond general financial inclusion and looking more deeply at what happens when you co-mingle access to basic services and access to finance for both the end-user and the entrepreneur. By linking access to finance with access to basic services, we are confident that we can help increase the quality of life and productivity of those at the BoP and create opportunities to extend financial inclusion for unbanked and under-banked families along the way.
We greet this new leg in our journey with excitement, confidence and a healthy amount of trepidation. Our vision of the success of our investees and the creation of social impact for the BoP is grand, and — knowing we cannot do this alone — we look forward to collaborating with other high-impact social ventures and impact investors in the future.