ACCION Capital Secures $61.6 Million to Fuel African Fintech Startups
Just as interest from Silicon Valley in African startups wanes, ACCION Capital, a branch of a global non-profit organization, has successfully raised $61.6 million—nearly double the size of its initial pilot fund. This significant investment aims to support a range of startups delivering essential financial services across Africa.
A New Milestone for ACCION Capital
Headquartered in Washington, ACCION Capital, previously known as ACCION Venture LAB, has announced the final close of its new fund. The investor base for this fund includes notable institutions such as Dutch Bank FMO, the French Development Agency Proparco, and the Ford Foundation, alongside major American financial firms like Mastercard and Metlife.
Investing in Emerging Fintech Talent
Having previously raised a $33 million fund in 2019, which was fully deployed, ACCION has recorded three successful exits in Africa. With the new fund, they plan to invest up to $1 million in early-stage fintech companies. Amee Parbhoo, ACCION’s partner, emphasizes that despite ongoing global fundraising challenges, the firm is witnessing the emergence of exceptionally strong founders in its target markets.
Insights from the Ground
During a recent diligence trip to Nigeria in August, Parbhoo and her team met with clients from a portfolio company. The conversations revealed that entrepreneurs who have weathered market volatility over the past six years are now innovating in fintech, creating a very encouraging outlook for the industry.
Current Trends in African Startup Funding
This year has seen a limited number of new funds targeting African startups, including a $55 million climate technology fund by Equator, a $43 million fund from Loftyinc in Nigeria, and $300 million raised by Endeavour Catalyst. Established funds, such as Africa Path’s $300 million and Norrsken22’s $205 million, continue to deploy capital into businesses across the continent.
Resilience in Financing
Funding for African startups in 2023 shows promise, with projections indicating it may not fall below last year’s peak of nearly $5 billion. Activity between January and June suggests a recovery trend, which may exceed the previous low of $2.2 billion, according to monitoring platform Africa: The Big Deal.
Improved Investor Discipline
Parbhoo observes that investor discipline has improved across Africa, with valuations becoming more aligned with global standards compared to the overheated market conditions of 2020-2021. The dynamics of fundraising have shifted, providing investors with greater leverage in negotiations.
A Positive Partnership Experience
Seye Bandele, co-founder and CEO of PayHR, reflects on ACCION’s investment process as “the most inclusive and transparent” he has experienced. He notes that ACCION’s extensive experience with numerous startups helps them to recognize common pitfalls, offering invaluable guidance to emerging entrepreneurs.