Low-income people face economic turmoil in the wake of the pandemic.

Only half of people worldwide have any savings.

Extreme weather affects the poorest households most.

Low-income farmers need new tools to feed their communities.

The world’s entrepreneurs face a $5 trillion financing gap.

We focus on global challenges

How we work

Reflections on creating economic opportunities in the Northern Triangle as part of the Partnership for Central America

Article

<em>Written by Rose Marks</em>

As a founding member of the Partnership for Central America, Accion is committed to creating economic opportunities for communities in the Northern Triangle countries of Guatemala, Honduras, and El Salvador. In response to the launch of the <a href="https://www.centampartnership.org/inherhands" target="_blank" rel="noopener noreferrer">In Her Hands Initiative</a> in June, we’re focusing on connecting women to the financial system and digital economy, bolstering workforce participation, and investing in women-owned businesses. Accion aims to build on our announcement at the 2022 Summit of the Americas earlier this year with longstanding partner <a href="/clients/fundacion-genesis-empresarial" target="_blank" rel="noopener noreferrer">Fundación Génesis Empresarial</a>, <a href="https://www.accion.org/accion-responds-to-vice-president-harris-call-to-action-with-commitment-to-expand-economic-opportunity-for-1-million-people-in-central-americas-northern-triangle" target="_blank" rel="noopener noreferrer">detailing a path forward</a> for increasing commitment to strengthening livelihoods and communities in the Northern Triangle.

The public-private Partnership for Central America formed in response to Vice President Harris’s Call to Action to the private sector to increase economic opportunity in the Northern Triangle, part of the <a href="https://www.whitehouse.gov/wp-content/uploads/2021/07/Root-Causes-Strategy.pdf" target="_blank" rel="noopener noreferrer">U.S. Strategy to Address the Root Causes of Migration</a>. Accion joined this partnership because we align with its mission to create solutions to address the complex factors threatening livelihoods in the Northern Triangle. These factors include access to markets and resources, inefficient supply chains, food insecurity, violence, corruption, climate change, gender disparity, and more. Total commitments to the Partnership for Central America now <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2022/06/07/fact-sheet-vice-president-harris-announces-more-than-1-9-billion-in-new-private-sector-commitments-as-part-of-call-to-action-for-northern-central-america/" target="_blank" rel="noopener noreferrer">add up to more than $3.2 billion</a>, signifying both political will and private sector momentum to make progress.
<h3>Bolstering support for the most vulnerable</h3>
Those at highest risk for irregular migration from these countries are low-income, urban youth populations under 40 with low levels of education. The median age of immigrants from these countries is 37, according to the Migration Policy Institute, with almost 50 percent lacking a high school diploma. Youth populations are also the largest demographic in these countries, representing approximately 30 percent of the total population. However, this is also the group that is least able to find educational, employment, or training opportunities, with <a href="https://www.csis.org/analysis/economic-opportunity-northern-triangle" target="_blank" rel="noopener noreferrer">nearly 28 percent of the youth population</a> unable to access any of these three opportunities. Many young people work inconsistently in the informal economy running small businesses or as gig workers. These statistics are even worse for women, who comprise only 32 to 42 percent of the labor force in Northern Triangle countries, according to most recent <a href="https://data.worldbank.org/?locations=GT-SV-HN" target="_blank" rel="noopener noreferrer">World Bank labor data</a>. Meanwhile, Customs and Border Patrol reported that of the 16.2 million emigrants from Central America and Mexico to the United States in 2020, <a href="https://www.cbp.gov/newsroom/stats/cbp-public-data-portal" target="_blank" rel="noopener noreferrer">nearly half were women</a>.

Rural populations dependent on agriculture are also at high risk for migration. There are approximately five million smallholder farmers in the Northern Triangle, making up just under one-third of the region’s labor force. Still, the agriculture sector only generates between five percent and 13 percent of GDP in these countries, according to the World Bank, despite a much higher level of production. Guatemala alone loses or wastes over a third of its total post-harvest food production each year, adding up to 20 million tons of food and lost revenue. At the same time, <a href="https://www.fao.org/3/ca6030en/ca6030en.pdf" target="_blank" rel="noopener noreferrer">many Guatemalans face moderate to severe food insecurity</a>.

Accion is committed to working toward meeting the needs of these unique groups using the lessons we have learned from more than 60 years of work in financial inclusion in Latin America. We call on others to join us and our fellow members of the Partnership for Central America in our effort to tackle the challenges in the region, with these considerations in mind:
<ol>
 	<li><strong>Take an ecosystem approach:</strong> It is crucial that efforts are facilitated using an ecosystem approach, where partners work together to boost both producer and consumer sides of Central American economies simultaneously. Progress in one area without attention to others runs the risk of exacerbating inequality and continuing to make irregular migration both an attractive option and an escape valve. Building economic ecosystems requires close coordination and a willingness to share platforms and resources, but it is the only way to ensure sustained investment in growing local businesses and communities.</li>
 	<li><strong>Invest in and amplify the reach of local solutions to local problems:</strong> No one is better placed to solve problems in their own communities than the people who live there. The demographic at most risk for irregular migration — urban youth under 40 — is also the demographic statistically most likely to pursue entrepreneurship and have the most digital literacy. Urban youth are in desperate need of opportunities to enter the formal economy. Investing in local fintechs and entrepreneurs will have exponential benefits — growing the workforce and providing resources for those best placed to solve local problems to implement solutions right at home.</li>
 	<li><strong>Support digital infrastructure to allow innovative solutions to reach the most vulnerable:</strong> Digitization has never grown more rapidly than during the COVID-19 pandemic, increasing access to markets, data, funding, and other resources across the globe. However, this leads to growing inequality for those who are still left out of the digital space. Furthermore, inefficient supply chains in the Northern Triangle are a major problem, leading to food loss and waste and limited market access on one end, and to food insecurity, unstable prices, and lack of consumer choices on the other. Digitization is one way to increase efficiency while providing opportunities for growth, so that the existing workforce is not disenfranchised in the process. Solutions should focus on taking steps to build physical and digital infrastructure so that all can experience the benefits of new and innovative technologies.</li>
</ol>
Accion will continue to pursue high-level plans to bring together private sector partners to innovate and co-create solutions to address these issues, and we call on other interested stakeholders to join us in these efforts. Learn more about the Partnership for Central America <a href="https://www.centampartnership.org/" target="_blank" rel="noopener noreferrer">here</a>. <a href="#_ftnref1" name="_ftn1"></a>

Partnering to create economic opportunities in the Northern Triangle

Ishan Mishra

Why we invested in AquaExchange, a full stack solution that enables smallholder aquaculture farmers in India to improve their livelihoods while supporting global food security

Aquaculture is a fast-growing industry that provides nearly 50 percent of the seafood consumed around the world. In line with this global trend, the adoption of aquaculture is fast-growing in India, resulting in the country becoming the second largest exporter of farmed shrimp in the world. In fact, in 2021, India recorded the highest-ever production — close to one million tonnes of farmed shrimp — in a calendar year. Farmers are eager to adopt aquaculture as it helps improve their per acre income more than growing crops such as paddy, but they face several challenges which are limiting the growth of the sector in India. The farmers lack access to technical knowledge, input finance to purchase equipment and supplies, and timely access to the export market to sell their harvest. In addition, aquaculture is labor intensive, the crop cycles are as long as six months, failure rates are as high as 33 percent, and the farmers are required to take on the entire capital risk without access to crop insurance.

At Accion Venture Lab, we believe in the potential of technology-driven solutions that leverage unique platform data to transform the delivery of financial services to underserved people. <a href="https://www.accion.org/aquaculture-fintech-platform-aquaexchange-raises-3-million-from-endiya-partners-and-accion-venture-lab" target="_blank" rel="noopener noreferrer">We are excited to back</a> Pavan Kosaraju and the rest of the founding team at <a href="https://aquaexchange.com/" target="_blank" rel="noopener noreferrer">AquaExchange</a> and support their vision to address the day-to-day challenges of aquaculture farmers through their differentiated technology solutions. The team brings together complementary skills and decades of experience in understanding farming practices and building credibility with farmers. AquaExchange’s full stack model helps farmers to:
<ol>
 	<li>Monitor their farms in real-time using wireless sensor equipment that integrates with a mobile app.</li>
 	<li>Buy farm inputs and sell the crop post-harvest, all via app.</li>
 	<li>Access technical guidance and real-time market intelligence.</li>
 	<li>Access credit to finance the purchase of seeds, feed, and medicines.</li>
</ol>
With its differentiated proprietary technology for farm automation and power management, AquaExchange will not only streamline the aquaculture value chain but also generate solid data-driven insights to open access to formal credit, which has largely remained elusive for the sector.

We are excited to partner with AquaExchange as they:
<h3>Provide smart farm management technology to farmers</h3>
[caption id="attachment_26860" align="alignright" width="400"]<img class="wp-image-26860" src="https://content.accion.org/wp-content/uploads/2022/09/aqua-exchange-farmers-india.jpg" alt="Aquaculture farmers in India" width="400" height="500" /> <em>Farmers in Vijayawada pull a shrimp sample from their pond to evaluate how their shrimp are growing by collecting samplings, weighing them, and testing them for disease.</em>[/caption]

Two of the key challenges that have held farmers back from adopting aquaculture farming in India are the lack of technical knowledge and efficient technology to monitor the farms. Due to these reasons, the crop failure rate within the first 45 days of cropping is 33 percent — putting farmers at significant risk of losing their investment. AquaExchange’s approach of offering farm management technology on a subscription basis has significantly improved the affordability of the product for smallholder farmers.

In addition, the company provides everyday farm management information such as the amount of feed and types of minerals to provide to the shrimp, common diseases prevalent nearby, and other data to help farmers to manage their crops effectively. The consistent use of the company’s technology can reduce crop failure rates and enable farmers to take up aquaculture farming to improve their farm income.
<h3>Assess real-time data to underwrite credit products to farmers</h3>
Aquaculture farmers need credit to purchase inputs like feed and minerals for their crops, but the inability to predict crop monetary realization and high failure rates have restricted them from accessing institutional lenders. Instead, most farmers rely on local money lenders who, in partnership with input retailers, finance the working capital required for feed, seed, and minerals for the six months of a cropping cycle. The farmers are charged high-interest costs (32 to 40 percent annualized interest rate) and often must agree to sell the crop through the moneylender. This inhibits the farmer's ability to earn a profit for their harvest.

Despite aquaculture being identified as a priority sector, banks have been unable to lend to aquaculture farmers as they lack an understanding of the nuances of the sector. AquaExchange’s cloud-based farm management equipment allows the company access to granular farm-level data, which they can use to assess the farmer's cultivation practices, crop value, and success rate. These data points help AquaExchange provide input financing credit products for the farmers while significantly minimizing associated risks. AquaExchange’s data-driven approach will help bring down credit costs and improve the availability of financial services for farmers.
<h3>Improve food security and create a positive environmental impact</h3>
Increasingly, climate change and overfishing are driving many species of marine life into extinction. The severe drop in the volume of sea catch is driving up the prices of seafood globally and, in the long term, threatens the food security of populations reliant on marine life for a protein source. Changing weather patterns and excessive use of fertilizers are making the soil saline, negatively impacting farmer yields and incomes. AquaExchange’s products and services are expected to drive the adoption of aquaculture, which will increase shrimp and fish production despite the changing weather patterns. In addition, aquaculture requires saline land which allows farmers to convert their less fertile land into aquaculture ponds.

Regarding carbon emissions, studies have shown that consuming seafood is far more efficient than consuming red meat. AquaExchange’s farm automation tools are powered by solar energy, reducing the consumption of energy required to run the aerators that provide oxygen to growing shrimp.

We are proud to support AquaExchange on their journey to enable smallholder aquaculture farmers in India to build more resilient farms and earn more income while supporting the global food supply and generating a positive environmental impact.

Farm automation tech opens financial access for aquaculture farmers in India

Debdoot Banerjee

With the right financial tools, women entrepreneurs like Priya can build businesses that support their families and communities

Priya is a hardworking caregiver and small business owner living in a rural village near the town of Thirukattupalli in south India. As a girl, she completed high school, then paused continuing her own education to allow her sisters to finish school in person. She worked in a shop to help secure their education, then pursued a degree in business administration from home. Fewer than half of girls in rural India <a href="https://time.com/5614642/india-girls-education/">pursue education past the age of 14</a> and an even smaller percentage attend university. Priya’s hard work and sacrifice helped her family defy the odds, and as she succeeds, she continues to lift up the people around her.

With her degree in hand and small children at home, Priya and her husband agreed that starting their own shop was the right choice for their family. A grocery store in their village would provide food and essential items to their community, make good use of her education, and help them care for their children. But they faced a very practical challenge: startup costs for a grocery store are high. <a href="https://www.accion.org/digital-tools-fuel-financial-resilience-in-rural-india">While most people across India have bank accounts, other financial products have yet to reach rural households</a>. Priya might have lacked access to a loan that would let her stock her shelves before opening, but fortunately, she connected with Dvara KGFS.

<img class="alignright wp-image-26835" src="https://content.accion.org/wp-content/uploads/2022/09/priya-small-business-owner-dvara.jpg" alt="Priya manages her business" width="450" height="630" /><a href="https://www.dvarakgfs.com/">Dvara KGFS</a> is a client-focused provider of financial products to low-income households and microbusinesses in rural India. The microlender provided Priya and several neighbors with a <a href="https://www.accion.org/can-group-lending-work-in-a-socially-distant-world">group loan — a product that allows rural women to guarantee one another</a>. They receive a low-cost loan and are accountable to each other for repaying it; together, Priya and her fellow group members used their loans to start businesses in their community. And by repaying regularly, they have begun building their own credit history to qualify for future loans.

When COVID-19 struck, Priya and countless other small business owners struggled to navigate the pandemic. Due to strict lockdown protocol, revenue at her store declined significantly. On top of that, Priya’s husband lost his job in 2020. Support from Dvara helped sustain her business so that, as pandemic restrictions lifted and supply chain snarls untangled, her family was financially stable and her shelves were stocked for her neighbors to shop from.

Accion partners with Dvara because of our shared commitment to expanding the reach, quality, and affordability of critical financial tools. Dvara reaches over one million Indians in rural areas, helping them build wealth, start and grow businesses, and access in-person and digital banking. As part of the Mastercard and Accion partnership to <a href="https://www.accion.org/mastercard-and-accion-partner-to-unlock-growth-for-millions-of-underserved-microbusinesses-around-the-world">help small businesses operate in and benefit from the digital economy</a>, Accion is supporting Dvara in its efforts to leverage technology to unlock efficiency and create optimal customer experiences. We are working together to bring digital financial management tools to small business owners in rural India and to help millions more women like Priya uplift their communities.

<a href="https://www.accion.org/priyas-story">See Priya tell her own story in our video, Priya defies the odds.</a>

[embed]https://vimeo.com/711735018[/embed]

Investing in women to uplift rural communities in India

Liza Curcio-Rudy

Tools and tactics to strengthen your gender strategy and fund more women founders

<a href="https://www.gendersmartinvesting.com/a-history-of-gender-lens-investing" target="_blank" rel="noopener noreferrer">More than a decade ago</a>, <a href="https://www.linkedin.com/in/jackie-vanderbrug-827b6b3/" target="_blank" rel="noopener noreferrer">Jackie VanderBrug</a> and <a href="https://www.linkedin.com/in/joy-anderson/" target="_blank" rel="noopener noreferrer">Joy Anderson</a> coined the term ‘gender lens investing’ to describe an emerging sector of finance designed to support the economic and social well-being of women. Since then, the field has evolved tremendously, with many venture funds, accelerators, and incubators forming to invest in and support women founders, funders, and customers. According to <a href="https://socialimpact.wharton.upenn.edu/research-reports/reports-2/project-sage-4/" target="_blank" rel="noopener noreferrer">Project Sage 4.0</a>, at least $6B in capital was raised across 206 gender lens investment funds as of June 2021. This is enormous growth (+361 percent since Project Sage’s <a href="https://socialimpact.wharton.upenn.edu/wp-content/uploads/2017/10/ProjectSageReport102317.pdf" target="_blank" rel="noopener noreferrer">first landscape analysis in 2017</a>) but is still microscopic compared to the <a href="https://www.bcg.com/publications/2021/global-asset-management-industry-report" target="_blank" rel="noopener noreferrer">$100T+</a> asset management industry at large. To close this gap and drive truly systemic change, asset managers of all kinds need to consider strategies for creating more equitable investment portfolios.

<span lang="EN-US" xml:lang="EN-US" data-contrast="none">The broader development industry has provided a helpful framework for where to begin. In</span><span lang="EN-US" xml:lang="EN-US" data-contrast="none"> the mid-1990s, the United Nations established </span><a href="https://www.unwomen.org/sites/default/files/Headquarters/Attachments/Sections/Library/Publications/2020/Gender-mainstreaming-Strategy-for-achieving-gender-equality-and-empowerment-of-women-girls-en.pdf" target="_blank" rel="noreferrer noopener"><span lang="EN-US" xml:lang="EN-US" data-contrast="none">Gender Mainstreaming</span></a><span lang="EN-US" xml:lang="EN-US" data-contrast="none"> as a global strategy to promote gender equality. These guidelines call on governments and other organizations to examine how all</span> <span lang="EN-US" xml:lang="EN-US" data-contrast="none">proposed programs, policies, and initiatives impact both women and men, even if they’re not specifically designed to address gender equality. For fund managers without an explicit gender mandate, this approach presents an opportunity to mitigate bias, fund more underrepresented founders, and </span><a href="https://hbr.org/2018/07/the-other-diversity-dividend" target="_blank" rel="noreferrer noopener"><span lang="EN-US" xml:lang="EN-US" data-contrast="none">increase returns by making every facet of the investment value chain more inclusive</span></a>.
<h3>Our approach</h3>
At Accion Venture Lab, gender impacts every aspect of our work. Women consumers and small business owners continue to be disproportionately underserved by banks and other financial service providers, and women startup founders raise a small sliver of global venture capital funding. These disparities hinder the outcomes that we strive for, both regarding the financial success of our portfolio companies and the impact of their products on the end customer. In response, our team has identified eight strategies to make the VC investment process more inclusive:
<h4>Sourcing</h4>
<strong><span lang="EN-US" xml:lang="EN-US" data-contrast="none">1. <span style="text-decoration: underline;">Make contact information more accessible</span></span></strong><span lang="EN-US" xml:lang="EN-US" data-contrast="none"><strong>:</strong> Venture capitalists often rely on warm introductions from industry contacts. This puts underrepresented founders, which often start with smaller investor networks, at a disadvantage when they go out to raise capital. By making contact information publicly available on your website or having a designated pitch submission form, investors can find differentiated deal flow and diversity their pipeline.</span>

<strong>2. <span style="text-decoration: underline;">Proactively explore new sourcing channels</span>:</strong> We’ve historically seen a dearth of resources for women founders in emerging markets, but that’s beginning to change. VCs can plug into networks like <a href="https://weraise.pk/" target="_blank" rel="noopener noreferrer">WeRaise</a> (Pakistan), <a href="https://restofworld.org/2022/why-we-set-up-a-tech-community-for-female-founders-in-latin-america/" target="_blank" rel="noopener noreferrer">Amela</a> (Latin America), and <a href="https://www.wetechng.com/about" target="_blank" rel="noopener noreferrer">WeTech</a> (Nigeria) by participating in office hours, judging pitch competitions, or hosting educational webinars.

<strong>3. <span style="text-decoration: underline;">Monitor progress</span>:</strong> Most VC firms use a customer relationship management (CRM) tool to track deal flow. By capturing the gender composition of founding teams, firms can determine if women founders are progressing through their pipeline at the same rate as male founders and identify any stages of the investment process where women are particularly likely to fall out.
<h4>Diligence</h4>
<strong>4. <span style="text-decoration: underline;">Reflect on your word choice</span>:</strong> Studies have shown that investors are <a href="https://hbr.org/2017/06/male-and-female-entrepreneurs-get-asked-different-questions-by-vcs-and-it-affects-how-much-funding-they-get" target="_blank" rel="noopener noreferrer">more likely to ask women founders about downside risk</a> and male founders about upside opportunity. Biased language can also pop up in job descriptions, blog posts, and website copy, which can inadvertently discourage women from engaging. Tools such as Kat Matfield’s <a href="https://gender-decoder.katmatfield.com/" target="_blank" rel="noopener noreferrer">Gender Decoder</a> can help you identify and remediate subtle bias.

<strong>5. <span style="text-decoration: underline;">Discuss diversity during diligence</span>:</strong> Investors can use the diligence process to discern how founders think about building diverse teams and establishing an inclusive culture. Ensuring alignment with founders during diligence can also make it easier to engage in these conversations later on as a board member.

<strong>6. <span style="text-decoration: underline;">Address team demographics in investment memoranda</span>:</strong> Including team demographic data in official investment memoranda can help firms hold themselves accountable to stated diversity goals. At Venture Lab, we also revisit and update this table when considering companies for follow-on investments.
<h4>Post-Investment Engagement</h4>
<strong>7. <span style="text-decoration: underline;">Request disaggregated data</span>:</strong> Portfolio companies report on a set of key performance indicators each month or quarter. By disaggregating the data (when possible), investors can pinpoint gender disparities and help founders identify opportunities to reach more women customers or better support existing customers.

<strong>8. <span style="text-decoration: underline;">Leverage your platform and relationships</span>:</strong> Representation matters. By continuing to bring more awareness to women and other underrepresented founders who are disrupting financial services, investors can help spur a more equitable, inclusive ecosystem.

Stay tuned for another article next month as we’ll dive deeper into how we’re integrating a gender lens into our publicly available resources for early-stage founders. To learn more about Accion Venture Lab, you can follow us on <a href="https://twitter.com/AccionVLab" target="_blank" rel="noopener noreferrer">Twitter</a> and <a href="https://www.linkedin.com/showcase/accion-venture-lab/" target="_blank" rel="noopener noreferrer">LinkedIn</a> or check out our podcast, <a href="https://www.accion.org/series/fintechforthepeople" target="_blank" rel="noopener noreferrer">Fintech for the People</a>.

How to build a more inclusive investment process

Podcast

<span style="font-weight: 400;">MSMEs are the fuel of the global economy, but there is often a disconnect between lenders and MSMEs on how to provide low-cost and abundant capital. Host </span><a href="https://www.accion.org/bio/matthew-schaar" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Matt Schaar</span></a><span style="font-weight: 400;"> talks with Sam Eyob of </span><a href="https://goldfinch.finance/" target="_blank" rel="noopener noreferrer"><span style="font-weight: 400;">Goldfinch</span></a><span style="font-weight: 400;"> on how Blockchain can be a potential solution to resolve this challenge.</span>

<span style="font-weight: 400;">Sam shares his journey from traditional capital providers to Warbler Labs and Goldfinch, the various business models Goldfinch operated under, and his opinion on how to build sustainable cryptocurrency systems that work for everyone. Sam and Matt also discuss how Blockchain systems can complement existing financial rails, if embedded finance can be enhanced on the Blockchain, and if that’s even a good idea in the first place.</span>

To learn more about Accion Venture Lab, visit our <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer">website</a> and follow us on <a href="https://twitter.com/accionvlab" target="_blank" rel="noopener noreferrer">Twitter</a> and <a href="https://www.linkedin.com/showcase/accion-venture-lab/" target="_blank" rel="noopener noreferrer">LinkedIn</a>.

<a href="https://link.chtbl.com/GBNpwX71" target="_blank" rel="noopener noreferrer">Listen here</a>.

<img class="size-large wp-image-26897 aligncenter" src="https://content.accion.org/wp-content/uploads/2022/09/Accion-Eyob-Quotecard-1024x576.png" alt="Quotecard for Fintech for the People Season 3 EP2" width="1024" height="576" />

Can Blockchain Open the Global Capital Markets to Underserved Businesses?

Rahil Rangwala

Earlier this year, we welcomed <a href="https://www.accion.org/bio/jasiel-martin-odoom" target="_blank" rel="noopener noreferrer">Jasiel Martin-Odoom</a> to the Accion Venture Lab team as Africa Investment Officer. Jasiel leads our investments in innovative inclusive fintech solutions in African markets and supports our portfolio companies in the region to scale their growth and impact further.

Prior to joining Accion, Jasiel was the Senior Investment Associate at Unreasonable Collective, a pledge fund focused on channeling diverse capital and support to Series A climate-tech companies. He has also provided fundraising and strategic support to over 100 growth-stage founders in Europe, the Middle East, and Africa.

Jasiel shares his background and what excites him about where inclusive fintech is headed in Africa:
<h3>Tell us about yourself. What led you to impact investing?</h3>
I am Ghanaian, born and raised, but I have spent the last decade and some studying, living, and working in New York, London, and Europe. I live in Accra today, but I consider myself a bit of a global citizen. Impact investing caught my attention in graduate school as a way to leverage money as a vehicle to solve real problems while also incentivizing founders, stakeholders, and investors to remain committed to the mission of the founders’ company, with the potential for outsized returns as they grow.
<h3>What drew you to join the Accion Venture Lab team?</h3>
The biggest thing that sold me on the Accion Venture Lab team was the palpable commitment to backing founders who are building impactful companies around the world. I spoke to everyone on the team prior to joining and their depth of knowledge in our sector and passion for the potential of the work we do convinced me that this was the place I belonged.
<h3>What excites you most about where inclusive fintech is headed in Africa? What trends and innovations are you seeing in the region?</h3>
I get most excited by two themes: financial services access for informal workers and digitizing supply chains. In Africa, the informal sector employs over 70 percent of people and most industries where these workers find themselves are predominantly offline and cash based. There is a real opportunity to build a business supporting the informal sector, like <a href="/a-new-way-to-help-people-living-paycheck-to-paycheck-in-egypt" target="_blank" rel="noopener noreferrer">our portfolio company, Khazna</a>, whose smartphone app connects Egyptians in the informal economy to a variety of financial services, including loans, savings, and insurance. In Nigeria and Kenya, <a href="/community-pharmacies-use-new-tech-platform-to-keep-shelves-stocked" target="_blank" rel="noopener noreferrer">our portfolio company Field Intelligence</a> is also leveraging tech to improve healthcare supply chains by helping small community pharmacies to manage their supply chains. The potential in this market is huge, and the trends I am seeing in the region confirm to me that we are just beginning to scratch the surface.

Another innovation that continues to evolve is decentralized finance (DeFi), and I’m interested to see whether or not DeFi technologies have the potential to drive financial inclusion in Africa. Accessing USD debt capital can get expensive for fintechs in Africa as foreign exchange (forex) rules and capital controls can be prohibitive. The illiquid forex markets and current hyperinflation environments combine to make it difficult for micro, small, and medium enterprises to access foreign capital needed for working capital. Crypto and DeFi technologies could be useful in solving this issue of illiquid forex markets. This is just one potential use case, but there are several interesting ways decentralization could potentially drive financial inclusion in Africa. I’m keeping my eye on how crypto regulations and startups evolve to resolve liquidity issues. My colleague Matt Schaar is exploring this topic more in the new season of <a href="https://www.accion.org/series/fintechforthepeople" target="_blank" rel="noopener noreferrer">Venture Lab’s Fintech for the People podcast</a>.
<h3>What is your vision for the future of Venture Lab in the region?</h3>
My vision for the future of Venture Lab in the region is to expand our presence and impact on the continent as one of the leading fintech investors and backers of innovation. Finding and investing in the best deals – both in primary markets like Lagos and Nairobi and in emerging markets like francophone Africa and Ghana – will be important for us to achieve this. We can get there by building a founder-friendly practice that is committed to the success of our portfolio companies.
<h3>What do you like to do outside of work?</h3>
Outside of work, I’m active on <a href="https://twitter.com/jasielinvests" target="_blank" rel="noopener noreferrer">Twitter</a> sharing insights on the founder journey, African tech, and gender-lens investing. When I am not tweeting, I dance Kizomba and play tennis a couple of times a week.

Introducing Jasiel Martin-Odoom, Accion Venture Lab’s Africa Investment Officer

Fintech for the People: Season 3, Episode 1 featuring Tim Rann and Ken Kou of Mercy Corps Ventures

Market disruptions happen. But, they often leave the people on the frontlines of those markets to pick up the pieces. Host <a href="https://www.accion.org/bio/matthew-schaar" target="_blank" rel="noopener noreferrer">Matt Schaar</a> talks with Tim Rann and Ken Kou of <a href="https://www.mercycorps.org/what-we-do/ventures" target="_blank" rel="noopener noreferrer">Mercy Corps Ventures</a> about how their team is investing in and testing blockchain-enabled solutions to determine if this relatively new technology can help build resilience in underserved communities and equip them to bounce back after market shocks.

Tim and Ken share Mercy Corps Ventures’ journey into web3, including which models they’re investing in and testing to build inclusive fintech systems that allow communities to recover quickly when disruptions affect their market. They also share ways to build responsible solutions in the risky — and potentially harmful — crypto-enabled world.

To learn more about Accion Venture Lab, visit our <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer">website</a> and follow us on <a href="https://twitter.com/accionvlab" target="_blank" rel="noopener noreferrer">Twitter</a> and <a href="https://www.linkedin.com/showcase/accion-venture-lab/" target="_blank" rel="noopener noreferrer">LinkedIn</a>.

<a href="https://link.chtbl.com/GdJc7xhI" target="_blank" rel="noopener noreferrer">Listen here</a>.

<img class="size-large wp-image-26817 aligncenter" src="https://content.accion.org/wp-content/uploads/2022/09/Accion-Kou-Quotecard-1024x576.png" alt="Fintech for the People S3 Ep1 quotecard" width="1024" height="576" />

Can Blockchain Build Resilience in the Underbanked?

Fintech for the People Season 3: Web3, Crypto, and Financial Inclusion

In the third season of Fintech for the People, we’ll speak with industry leaders about the trends and technologies in crypto and decentralized finance and explore their potential to drive financial inclusion. We’ll hear from advocates, skeptics, investors, and builders as we aim to shed more light on this topic. If you’re entering this conversation with similar questions as us, we hope you’ll walk away with a more comprehensive view of the topic – and from there, draw your own conclusions.

Fintech has the power to build a more inclusive world. Fintech for the People showcases the innovators who are developing fintech solutions that reach the people who’ve been left behind. In each episode, we’ll hear from leaders who are creating and investing in financial solutions that bring every person the financial tools they need to grow their business, support their family, and build their community. Together, we’ll learn how fintech looks different in spaces and places where basic financial services are a luxury — and how solutions to address these challenges require a different level of creativity, empathy, and execution.

Season 3 of Fintech for the People, an <a href="https://t.sidekickopen90.com/s3t/c/5/f18dQhb0S7kF8cFC2QVTHnMk59hl3kW7_k2841CX6NGW35Qwst7vRTl8W1Dh2LL90kT91f197v5Y04?te=W3R5hFj4cm2zwW4mKLS-3z8myBF43Tw8ZmLp01&amp;si=8000000019979488&amp;pi=fe7a662e-0158-4f4c-ca72-b4f0559418f8" target="_blank" rel="noopener noreferrer">Accion</a> podcast, is hosted by Matt Schaar, Operating Partner of <a href="https://t.sidekickopen90.com/s3t/c/5/f18dQhb0S7kF8cFC2QVTHnMk59hl3kW7_k2841CX6NGW35Qwst7vRTl8W1Dh2LL90kT91f197v5Y04?te=W3R5hFj4cm2zwW4mKLS-3z8myBW43Tw8Z49LdrKW43Yfm13JF5JfW49MWlf41ZnhDW4ff5fN3F7-sKW1GJTzv4fPf-tf1GDJt004&amp;si=8000000019979488&amp;pi=fe7a662e-0158-4f4c-ca72-b4f0559418f8" target="_blank" rel="noopener noreferrer">Accion Venture Lab</a>, an early-stage investor in inclusive fintech startups. Learn more about Accion Venture Lab <a href="https://t.sidekickopen90.com/s3t/c/5/f18dQhb0S7kF8cFC2QVTHnMk59hl3kW7_k2841CX6NGW35Qwst7vRTl8W1Dh2LL90kT91f197v5Y04?te=W3R5hFj4cm2zwW4mKLS-3z8myBW43Tw8Z49LdrKW43Yfm13JF5JfW49MWlf41ZnhDW4ff5fN3F7-sKW1GJTzv4fPf-tf1GDJt004&amp;si=8000000019979488&amp;pi=fe7a662e-0158-4f4c-ca72-b4f0559418f8" target="_blank" rel="noopener noreferrer">here</a>.

Listen and subscribe <a href="https://link.chtbl.com/UOdxwTkS" target="_blank" rel="noopener noreferrer">here</a>.

<img class="aligncenter wp-image-26794 size-large" src="https://content.accion.org/wp-content/uploads/2022/09/FFTP-S3-gray-1024x576.png" alt="Fintech for the People Season 3 poster with Matt's headshot" width="1024" height="576" />

Introducing Season 3 of Fintech for the People

How non-US startups can leverage employee stock option plans (ESOPs) to attract and retain employees

<em>Written by Ava Chang, Summer Associate at Accion Venture Lab</em>

In the early days of a startup, attracting talent and retaining employees can be major challenges. Building employee stock option plans (ESOPs) into recruitment and retention strategies can give early-stage companies a competitive edge and create an energized and motivated workforce. Several studies from the <a href="https://www.nceo.org/article/research-employee-ownership" target="_blank" rel="noopener noreferrer">Employee Ownership Foundation</a> found that firms offering ESOPs have significantly higher sales growth and sales per worker than matching firms without ESOPs.

While providing ESOPs to all staff is common, strategies can differ based on a number of factors, including tenure (e.g., join date), job level, and team.

Stock options are often also provided as a “top-up” to high-performing employees. There are, of course, other ways to offer bonus compensation to employees, including cash bonuses for hitting certain targets.

But for startups who want to leverage cash for other strategic needs to accelerate growth, stock options are a sensible option.

There are a number of other powerful reasons for your startup to provide ESOPs:
<ol>
 	<li>
<h4>Recruit, retain, and incentivize talent</h4>
Providing ESOPs motivates your team to work for the company’s growth and its long-term success. As the company grows and performs well, the employees also share in the company’s success.</li>
 	<li>
<h4>Encourage employee ownership</h4>
ESOPs can provide employees with a stronger feeling of belonging, enhancing their long-term commitment to the organization. A “we’re in this together” mentality is especially important at the earliest stages. This is further manifested with voting rights and, potentially, dividends at later stages.</li>
 	<li>
<h4>Develop attractive compensation mechanisms when one can’t pay competitive salaries</h4>
Startups often need to use their limited cash for other strategic needs, such as to fuel growth, and therefore cannot pay as competitive a salary as bigger, more established companies. For many people who leave big companies to work for startups, the employee stock ownership plan is a major draw.</li>
</ol>
<h3>ESOPs are not yet readily leveraged in countries with early tech ecosystems</h3>
While ESOPs are commonly offered and understood in countries with mature tech ecosystems, including the United States and India, Accion Venture Lab has found that this often isn’t yet the norm in markets with an emerging tech ecosystem. In sub-Saharan Africa, for example, employee stock ownership plans are still uncommon. Arrangements are often only for founders and top executives to have <a href="https://qz.com/africa/2003781/sokowatch-has-figured-out-a-way-to-retain-employees/" target="_blank" rel="noopener noreferrer">equity in their companies</a>.

From our discussions with stakeholders in these regions, we’ve found that ESOPs are uncommon for a few reasons:
<ul>
 	<li>There is often a lack of understanding of stock options and how they work.</li>
 	<li>Employees question if and when they would be able to “cash out” and often prefer immediate liquidity.</li>
 	<li>Employees may be risk-averse and worry that they would ultimately earn nothing if the value of the company declines.</li>
</ul>
Hence, cash-based salaries and rewards are still the norm to provide compensation and promote retention. While we don’t suggest that companies stop using cash bonuses, which we believe also have their merits, we encourage companies to explore ESOPs as a tool to motivate and retain their teams and create a culture of ownership and community.

More and more early-stage companies in sub-Saharan Africa are leading the charge in instituting option plans and ensuring their employees share in the upside and receive compensation for their hard work.

<img class="aligncenter wp-image-26754 size-large" src="https://content.accion.org/wp-content/uploads/2022/08/accion-venture-lab-startup-esop-1024x830.jpg" alt="Employee stock option plan considerations for startups" width="1024" height="830" />
<h3>Four ways to set up your ESOPs strategy for success</h3>
To develop and institute an ESOP plan successfully, your employees must understand and be excited about the prospects of such a plan.

We recommend taking the following steps, based on our conversations with founders and other investors in our markets:
<ol>
 	<li>
<h4>Understand how ESOPs are perceived in your market</h4>
Speak with HR professionals, your teams, and other founders and investors to learn what is understood locally about ESOPs.

Focus on what concerns exist from both the founder and employee perspectives. Note, we’ve found that different teams within a startup often have varying degrees of knowledge on stock option plans. Engineering and product teams tend to know more because they’ve generally been more exposed to ESOPs.</li>
 	<li>
<h4>Speak to other founders</h4>
Some companies are further along in their ESOPs journey than others. Chat with other founders in your ecosystem to learn about their initial challenges, how they addressed them, the ultimate benefit (or lack thereof) they’ve seen from instituting ESOPs, and how they structured these plans.

Some startups only provide them for high-performing employees, while others offer them to all team members. Both approaches have their merits, but we usually recommend the latter to promote a sense of company-wide ownership.</li>
 	<li>
<h4>Conduct company-wide learning sessions to improve understanding and share your excitement.</h4>
Develop engaging learning sessions that address how ESOPs work and common questions or concerns. Make sure your enthusiasm shines through and express why you’re so excited for your employees to share in the company’s long-term upside. This approach will help get people on board and develop an even greater sense of excitement.</li>
 	<li>
<h4>Craft an ESOP strategy that considers employee needs.</h4>
After taking the actions above, see if there are ways you could address employee needs. For instance, some may prefer more immediate liquidity after the initial vesting period versus cashing out during later, big liquidity events. Consider adding secondary purchases as you raise additional rounds.</li>
</ol>
For further insights and detail on ESOPs, check out Accion Venture Lab’s <a href="https://content.accion.org/wp-content/uploads/2018/08/Employee-Stock-Option-Plans-ESOP-Best-Practices-2.pdf">ESOPs Overview and Best Practices</a>.

A guide to employee stock options for startups in emerging markets

Fintech for the People: Season 2, Episode 6 featuring Shrinivas Kasar, Co-Founder of Cashinvoice

In India, small businesses contribute over 30 percent of the country’s GDP, but most remain unserved by formal banking channels. These businesses are often held back from growing and scaling due to keeping up with supply chain costs. Host <a href="https://www.accion.org/bio/amee-parbhoo" target="_blank" rel="noopener noreferrer">Amee Parbhoo</a> talks with Shrinivas Kasar, Co-Founder of <a href="https://cashinvoice.in/" target="_blank" rel="noopener noreferrer">Cashinvoice</a>, to discuss how Cashinvoice unlocks supply chain financing for micro, small, and medium enterprises (MSMEs) in India.

Shrinivas shares how Cashinvoice works to bridge trust between MSMEs and India’s financial ecosystem. Amee and Shrinivas discuss how embedded finance gives unique advantages to Cashinvoice’s platform, how Cashinvoice incentivizes corporate and lending partners, and how they navigate the challenge of making affordable credit available to small businesses that are entirely out of the mainstream banking system.

To learn more about Accion Venture Lab, visit our <a href="https://www.accion.org/how-we-work/invest/accion-venture-lab" target="_blank" rel="noopener noreferrer">website</a> and follow us on <a href="https://twitter.com/accionvlab" target="_blank" rel="noopener noreferrer">Twitter</a>.

&nbsp;

<a href="https://link.chtbl.com/rtEgyeNt" target="_blank" rel="noopener noreferrer">Listen here</a>.

<img class="size-large wp-image-26686 aligncenter" src="https://content.accion.org/wp-content/uploads/2022/08/Accion-Cashinvoice-Quotecard-1024x576.png" alt="Accion-Cashinvoice-Quotecard" width="1024" height="576" />

Unlocking Supply Chain Financing for Small Businesses in India

Latest

We harness the power of digital technology to

A GLOBAL NONPROFIT

We harness the power of digital technology to create a financially inclusive world.

We focus on global challenges

Building Resilience

Stability for Families

SAVING MONEY

Changing Climate

Going Digital

Reliable Food Supply

Economic Progress

How we work

Advise

Invest

Partner

Influence

Partnering to create economic opportunities in the Northern Triangle

Farm automation tech opens financial access for aquaculture farmers in India

Investing in women to uplift rural communities in India

How to build a more inclusive investment process

Read more

Latest

Sign up to receive emails