Catalyst Fund is expanding inclusive-tech acceleration to new sectors

Authored by: Maelis Carraro
October 15, 2020 - 7 mins read
Catalyst Fund expands inclusive tech accelerator to new sectors

Building on our proven approach to accelerating inclusive fintech startups and innovation ecosystems in emerging markets, Catalyst Fund is excited to expand our work to new sectors where fintech can further inclusion and empower underserved communities. Finance is becoming an enabler, touching multiple industries where non-financial companies incorporate financial products to enhance their value offering, retain consumers and improve users’ lives. This is transforming the financial industry at its core and creating new opportunities to impact underserved populations.  

Given this expansion, we are building on our flagship Inclusive Fintech program, supported by our long-standing partners JPMorgan Chase and UK aid, to announce Catalyst Fund’s second program, the Catalyst Fund Inclusive Digital Commerce Accelerator, launching this month in Ghana, with support from Mastercard Foundation. This Accelerator will run in parallel with our flagship Inclusive Fintech program, creating a family of programs with new partners that will enable us to further our mission of improving the wellbeing of underserved individuals and small businesses globally.


Five years accelerating inclusive fintech 

In 2015, our flagship Catalyst Fund program was created to accelerate early-stage inclusive fintech startups that are building solutions for underserved individuals and small businesses around the world. Our mission is to fill the critical capital, support, and talent gaps that limit innovation across emerging markets so as to foster the growth of solutions that are accessible, affordable, and appropriate for low-income and vulnerable communities. 

Over the past five years, Catalyst Fund has worked with over 37 inclusive fintech startups, helping them scale through our unique blend of catalytic grant capital; hands-on and bespoke venture-building support; and 1:1 connections to investors, corporate innovators, and ecosystem partners. Our startups have gone on to raise over $81M in follow-on funding and reach over 2.5M underserved customers – 90% of whom are still in business, despite the pandemic and the constant challenges facing all early-stage startups.

At the end of 2019, we expanded the way we approach our mission noting that startup success is tightly linked to the broader innovation ecosystem. With new support from UK aid and JPMorgan Chase, we took on a larger mandate to accelerate the wider fintech ecosystems that surround startups in five key markets – Kenya, Nigeria, South Africa, Mexico and India. We recognized that these environments are critical to further enabling fintech startups to scale and improve financial health and inclusion. As part of this work, we have continued to expand our Circle of Investors (now counting over 65 fintech and impact investors globally), we have created a Circle of Corporate Innovators to facilitate pathways to scale for startups, and we have launched a talent program to sponsor internships for young talent at our portfolio of fintech startups.


Recognizing the potential for fintech approaches across a number of sectors

Our portfolio companies have already created a diverse set of financial solutions touching multiple sectors, including digital health insurance for gig-workers (e.g. Turaco, Bamba), digital credit and payments for small businesses (e.g. Sokowatch, BancoMare), PAYGo solutions for essential services (e.g. PayGo Energy, Graviti), digital investments for youth (e.g. Cowrywise), digital savings for education (e.g. Escala, Meerkat), AI-enabled KYC solutions for financial service providers (e.g. Smile Identity), and agri-tech platforms (e.g. FarMart, PayAgri).  

As emerging market economies become more digital, mobile money, smartphone and internet penetration and improvements in digital infrastructure, have radically expanded the array of financial services that can be offered digitally. Financial services have become embedded into other digital offerings so as to grow the value proposition to better serve and retain customers, driving higher margins and improving users’ lives. This year, the COVID-19 pandemic has further underlined the role of tech and corresponding opportunities for tech entrepreneurs to enhance the wellbeing and financial health of families and businesses around the world. 

This is why we are excited to announce this expansion of our strategy to support a wider range of inclusive tech companies. Through our additional programs, we will support tech innovators across key areas where embedded fintech approaches are crucial to developing better and more impactful solutions that can improve the livelihoods and resilience of underserved customers. Our key areas of focus will include: financial health, inclusive digital commerce, and climate resilience – with additional sectors to be explored in the near future.


Potential of “embedded finance” in emerging markets 

Over the past decade, emerging markets fintech solutions have boomed; they have  evolved from specific vertical financial products to multifaceted solutions across a range of product categories. By embedding financial offerings alongside other services, providers have been better able to address customers’ needs, increase usage, and lower costs of acquisition and delivery. This approach has demonstrated how financial services can be modularized and embedded into other business models, and how non-finance companies can add financial services to their offerings, integrating payments, credit, insurance, and even savings or investments into their end-user experiences. 

The potential of embedded finance is even more promising in emerging markets where banking infrastructure is poor, trust in formal financial institutions is low, and penetration of financial services remains limited. In these environments, embedded finance approaches will allow tech-enabled businesses to build upon their existing touch points and trust with customers to add further value by integrating financial services. These businesses will also benefit from recent improvements in digital payment infrastructure, digital KYC solutions, cash-in/cash-out networks, and connectivity in many emerging markets. 

We see this as a necessary and exciting shift, as finance is “a means to an end” tied to improved livelihoods and opportunities. As our ways of earning and prospering become digital, it makes eminent sense to ensure that the means to do so – namely, finance – also become digital and embedded together seamlessly

Many VC investors and analysts in the US and Europe have already noted and praised this trend. Matt Harris has predicted that fintech will become the “fourth development platform”, and Andresseeen Horowitz’s Angela Strange boasts that “every company will be a fintech company”. Investors like Anthemis (a member of the Catalyst Fund Investor Advisory Committee) are making embedded finance a core investment thesis and pushing for a world where “finance is embedded deep inside the workings of our economies, powering the lives and progress of citizens and businesses rather than being a service consumed independently.”


Solving barriers to scale faced by tech innovators 

Although there is widespread excitement about this expansion, early and growth-stage entrepreneurs in emerging markets still face critical challenges: lack of capital, limited skill sets, weak networks, and numerous barriers to reaching low-income and remote populations. Catalyst Fund’s venture-building model was developed to solve these specific challenges. We bring in our team right as early-stage startups are facing critical barriers to product market fit and growth to provide deep expertise in product development, technology, and local market knowledge to accelerate ventures towards impact and scale. Our team is spread across all our key markets to provide localized and contextually-relevant support.  

As fintech spreads across sectors, this approach is now relevant beyond financial services and can become the premier approach to venture acceleration across many sectors, fostering innovative solutions for the underserved.  As we expand our program, we will be guided by our experience and the six core principles that distinguish the Catalyst Fund:



Expanding our horizons to new, under-catalyzed sectors 

Additional Catalyst Fund programs will enable us to support a wider variety of tech-enabled solutions in emerging markets across areas where embedded finance can add value and our expertise can catalyze new innovation for underserved people. We will continue to deepen our understanding of what types of innovations work for these populations and where fintech can be a force for good. They will enable us to scale and experiment with ways our approach can translate into new areas where tech can spur positive development outcomes.  

In this first stage of expansion, we will deepen and widen our focus across three core areas, each aligned with our current investment and learning theses: 1) financial health, 2) inclusive digital commerce, and 3) climate resilience.


Financial health

First, we will continue to support inclusive finance and financial health startups with deeper consideration for how customers use financial products and what value those products are providing. Fintech and tech-fin innovators can take advantage of “embedded finance” strategies to develop complete solutions that have the potential to improve users’ financial health, going beyond financial inclusions to promote beneficial products and usage. We believe that “financial health is not just another buzzword for embedded finance strategists, but […] a way of thinking about the next generation financial sector”. This becomes even more important during a pandemic and economic crisis, when most low-income individuals struggle to make ends meet on a daily basis and to access credit to smooth income, and small businesses fail to restart their operations.


Inclusive digital commerce

Second, we will expand our work supporting digital commerce companies that can create a more inclusive and resilient digital economy for micro and small enterprises (MSEs).  COVID-19 has  threatened the livelihoods of an estimated 1.6 billion workers in the informal economy, further weakening the bedrock of many economies, especially across Africa. In this context, digital platforms have the potential to expand opportunities for both informal MSEs and non-salaried gig workers via hybrid online-offline models and other digital tools. To date, MSEs have largely struggled to benefit from digital solutions due to lack of effective digital onboarding mechanisms, low connectivity and limited devices, few or no financing options for informal borrowers, low trust in online payments, and poor logistics infrastructure and interoperability across systems.

However, digital platforms for inventory supply or for sales — whether in agriculture (e.g. payAgri), retail (e.g. Sokowatch) or pharmaceuticals (e.g. Field)–  are finding ways to reach informal MSEs and layering financial services to strengthen their offerings to make sure they too can benefit from the digital economy.


Climate resilience

Third, we will strive to support tech companies that can improve the resilience of vulnerable populations currently facing disproportionate risk from climate change. Even as we deal with the waves of COVID-19 disrupting our ways of life, we cannot look away from the tsunami of climate change that exposes and exacerbates existing vulnerabilities. This is especially true in Africa, where an estimated 70% of the labor force works in agriculture and fisheries, two sectors at extreme risk from climate hazards, and most people lack access to financial services, affordable technologies, and consistent income. 

Tech and fintech startups are already at the forefront of creating innovative solutions to help vulnerable populations cope with the impact of climate change across emerging markets, from companies offering point-of-sale financing for solar water pumps (e.g. SunCulture) to hyper-local parametric crop insurance that pays out based on rainfall data from satellites (e.g. WorldCover) to app-based marketplaces for fishermen to sell directly to restaurants (e.g. Abalobi); but we’re only scratching the surface of innovation in this space.



Against this background of Catalyst’s ongoing evolution, today, we are excited to announce the launch of Catalyst Fund’s second program, the Inclusive Digital Commerce Accelerator,  in partnership with Mastercard Foundation, and local technology incubator MEST in Ghana. This program aims to help informal micro and small enterprises (MSEs) in Ghana, especially women and youth among them, benefit from digital commerce opportunities. Along with support and deep local expertise from Mastercard Foundation and MEST, we aim to enable companies building the next generation of digital commerce solutions in Africa to better reach and serve informal MSEs. We can’t wait to apply our toolbox to this challenge and leverage digital commerce rails to improve the financial resilience of small businesses. Other programs coming soon, so stay tuned.


If you are interested in learning more about our expansion strategy or want to explore ways to partner with us, please reach out to us at 

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