For inclusive fintech startups to truly succeed, supporting the startups alone is not enough. At Catalyst Fund we’re committed to accelerating the wider fintech ecosystem in our focus markets – Kenya, Nigeria, South Africa, Mexico and India – in an effort to bring together players who have the capacity to help companies survive the valley of death and reach scale.
We’re building networks of global and local investors, corporate innovators and more who are interested in working with our startups and others in the inclusive fintech space, in a collective effort to enable the industry to thrive. We introduce them to our startups on a 1:1 basis to support partnerships that are key to unlocking growth and enabling pathways to scale.
Today, our Circle of Investors is a collaborative community of nearly 60 global and locally rooted investors. Last month we welcomed six new firms into our Circle, including: South Africa’s Crossfin Ventures, Nigeria’s Greenhouse Capital and Microtraction, Kenya’s AHL Venture Partners, Mexico’s Angel Ventures and India’s Asha Impact.
They each bring rich knowledge and context from their local markets, as well as significant experience working with fintech companies. By joining the Circle, they’ll receive access to a pipeline of vetted and de-risked early-stage startups to evaluate for investment, and will have an opportunity to recommend promising startups who can be fast-tracked to the fund’s accelerator program.
In addition, members will be able to attend invite-only convenings and gain access to industry data and insights on inclusive fintech across emerging markets, while collaborating with the Catalyst Fund team on publications designed to share proof points and learnings with the wider community.
We spoke with some of our new members to get a snapshot of their investment approaches and interests, and insights into their respective startup ecosystems.
CrossFin Ventures from South Africa backs innovative companies that focus on solving everyday pain points that are not adequately covered by existing products in the market. When asked why they have chosen to invest in fintech startups, Anton Gaylard, Co-founder and COO of the firm, said, “We have a portfolio of mature, cash-generative fintech businesses, so we are well-positioned to back complimentary startups and then leverage the ‘portfolio effect’ to de-risk these investments and provide the mentorship required by the teams to fast-track their respective businesses. It’s also a great way to keep an ear to the ground and be close to new and novel initiatives.”
Early-stage angel investment firm Microtraction, based in Lagos, Nigeria, backs, supports, and funds remarkable African tech entrepreneurs at the earliest stages. Their goal is to be the most accessible and preferred source of pre-seed funding for remarkable African technology entrepreneurs.
Chidinma Iwueke, Partner at Microtraction, told us why she believes in the power of entrepreneurs:
“We believe that the long-term, sustainable socio-economic development in Africa will be driven by entrepreneurs and innovations. Our mission is to accelerate Africa’s economic growth by investing and backing entrepreneurs who leverage technology, capital and innovation to try and solve some of the largest problems on the continent.”
Greenhouse Capital, also based in Nigeria, identifies as Sub-Saharan Africa’s largest fintech investment fund by portfolio size. Their portfolio includes early-stage African companies, as well as foreign startups targeting the African market.
Surabhi Nimkar, Principal at Greenhouse Capital, discussed the team’s approach to the COVID-19 crisis and how they are helping their portfolio mitigate risks:
“For those startups that were fundraising just before the pandemic hit Nigeria, it’s been incredibly difficult to close rounds because many investors are tightening their purse strings and reserving their capital to support their existing portfolio companies.
“We are working closely with our portfolio companies and using our networks and influence to help them close key sales and investment deals through this period. We have also used our platform to help bring awareness to our portfolio and the numerous initiatives they have launched to support their customers and communities in response to COVID-19.”
Kenya’s AHL Ventures Partners is one of the pioneer impact-focused venture capital firms in Africa. Since 2008, they have supported more than 35 impact-focused businesses and funds that operate across 27 different African countries.
We asked Evi Muco, AHL Portfolio Manager, for his advice to fintech companies trying to fundraise today in emerging markets.
“The most relevant piece of advice for today is to show the resilience of your startup to COVID-19. In these times, a startup should be able to show that they have the right strategy, team, operations and technology to navigate through the instability and the multiple ongoing and future shocks. The vital thing is to show a scalable business model.”
Asha Impact, an early-stage regional investor in India, is deploying domestic capital for mission-driven entrepreneurs, or as they like to call it, “capital plus plus”. Aditi Gupta, Principal, Investments at Asha Impact spoke to us about the advantage they see working with local investors.
“Having access to domestic capital means you’re working with LPs who have that existing know-how. For early-stage startups in India, working with partners who have that regional context and understand the challenges is underrated, but very essential.”
Enabling local experts to learn from one another and share cross-market insights is another core value proposition for Catalyst Fund’s Circle of Investors.
Mexico’s Angel Ventures (AV) sees this as a significant opportunity. AV began in 2008 as AV Network, with a goal of connecting angel investors with startups. They ultimately helped startups obtain USD$14 million in investments. In 2013, AV created the first multi-sector co-investment fund in Mexico and launched its second fund in 2016, targeted toward innovative startups located in the countries of the Pacific Alliance.
When asked why Angel Ventures is excited to join the Catalyst Fund Circle of Investors, Hernán Fernández Lamadrid, Founder and Managing Partner at AV, said:
“We see a great opportunity in south-south collaborations with other emerging markets like Mexico. At Angel Ventures, we recognize the many similarities between markets and challenges that fintech entrepreneurs in Global South countries are addressing. We want to encourage our companies to scale to other similar markets and be a soft-landing partner to innovative foreign companies looking to enter Mexico.”