Wednesday
November 30
2016

Accion Venture Lab: Fintech Lenders Leveraging Technology to Close Critical Funding Gap for Small Businesses

Accion Venture Lab, the seed-stage investment initiative of financial inclusion leader Accion, released a report today on the latest innovations in the field of micro, small, and medium enterprise (MSME) finance. The report explores how innovative, tech-enabled lenders are using niche marketing, digital or mobile platforms, and enterprising partnerships – and often a combination of all three – to make financing available to underserved MSMEs.

Informed by its investments and work with more than a dozen fintech start-ups in the MSME finance space, Venture Lab charts a course for investors, regulators, microfinance institutions, and entrepreneurs to seize today’s opportunity to close the gap.

MSMEs contribute up to 33 percent of GDP in emerging economies, but face a critical shortage of capital to fund their businesses. Given their small loan sizes and the high costs typically associated with serving them, banks and traditional lenders are often reluctant to serve these businesses.

At the same time, the size of funding needed by many of these businesses make them too large to be eligible for funds from traditional non-bank financial institutions such as microfinance providers. The International Finance Corporation (IFC) estimates that the emerging market MSME financing gap alone stands at more than US$2 trillion.

Source: Accion (link opens in a new window)

Categories
Investing
Tags
Accion, financial inclusion, investement, microfinance