We’re Doubling Down on Investing in Fintech Entrepreneurs with $350M in Fresh Capital
Today we are thrilled to announce a significant milestone with our early-stage global venture fund, as we’ve secured a new commitment of $350 million. This funding comes on top of the initial $200 million in portfolio investments and $300 million in capital that we secured at the time of our spinout from Omidyar Network in 2019. Now, with $850 million under management, we are building towards a permanent capital base while doubling down on fintech investments in the U.S. and across Africa, Asia and Latin America in order to build a more fair financial system.
Since we founded Flourish, we’ve believed in the opportunity and the need to build a better, faster financial system that will positively influence people and businesses. When we started investing, we were focused on key themes such as digital banking (neobanks), embedded finance, infrastructure, insurtech, and regtech. We’ve seen these themes be proven out, and as a result, fintech has brought significant advancements and opportunities to underserved individuals and businesses around the world.
Across our 71 global fintech investments and 18 ecosystem partners, we have 7 unicorns and a number of exits. We are thrilled that this fresh capital empowers us to continue supporting fintech startups, as well as our work collaborating with policymakers, regulators, industry leaders, and ecosystem players, to enact much-needed ongoing improvement in the financial system. Because for us, success is measured by both achieving venture returns and contributing meaningfully to systemic change.
Fintech Startups Chime, Clerkie and Unit Deliver Venture Returns + Sector-Wide Change
We were early investors in companies like Chime in the U.S., which pioneered the idea that basic banking services should be helpful, easy, fairly priced, and digital. From the outset, Chime pledged to credit customers the day paychecks were deposited and chose to forego minimum balance requirements and overdraft fees. As Chime grew to nearly 15M customers, it put competitive pressure on traditional banks–which combined with regulatory scrutiny–led a number of leading banks to do away with overdraft fees, saving U.S. consumers $5B. As a result, Chime is credited with undercutting incumbent overdraft fee models and its vision and execution demonstrate how digitally-led, modern financial services can improve lives and drive sector change.
Other notable investments in the U.S. like Clerkie and Unit are also positively affecting the sector and offer similar benefits to businesses and consumers. Clerkie’s embedded software solution provides a win-win for borrowers and lenders alike. Borrowers reduce debt and avoid delinquencies by using Clerkie’s automated debt repayment tool that can increase FICO scores by an average of 113 points. Its hardship assistance program can also reduce consumer debt burdens by as much as 70%. At the same time, Clerkie’s bank and lending partners are able to dramatically increase recovery rates. Unit empowers companies to embed accounts, cards, payments, and lending, thereby eliminating enormous complexities to offering financial products. Unit owns the heavy lifting of compliance and bank relationships, enabling its clients to leverage their unique datasets and drive significant retention, revenue and engagement.
Indifi, ApnaKlub, ShopUp, Dinie, and MaxAB Are Improving the Lives of SMEs
Across India, Southeast Asia, Africa, and Latin America, one of our main theses is that digital credit innovations have the potential to expand access to formal credit. There are millions of people who don’t have the equivalent of a FICO score or a regular paycheck. Small businesses operate in the informal economy and struggle to access banking services and working capital credit. Their lives, however, are increasingly digitized, generating new data that can help underwrite loans for consumers or proxy the cash flow of a small business making it possible to extend people working capital credit without traditional collateral.
One Flourish portfolio company, Indifi, was an early pioneer of SME digital lending in India and disbursed 73,000+ loans across 400 cities, for a total value close to $500M. The company focuses on the underserved, new-to-credit segments, with 30% of its customers in business for less than two years and more than 15% female entrepreneurs who often experience challenges obtaining credit from traditional channels. Through fintech companies like Indifi, total digital credit in India surpassed $200B in 2022, representing nearly 15% of total lending there. In parallel, India’s “credit-unserved” population decreased from 67% to 50% between 2017-2021.
A Forbes Asia 100 to Watch List 2023 company, ApnaKlub, also targets underserved markets and applies new financial technologies. Across rural India, corner shops using ApnaKlub’s app now have access to more than 1,000 products offered by 300 brands with 55% reporting an increase in their store earnings.
In Bangladesh today, 70% of stores play an informal banker role by selling merchandise on credit though only 10% of them have access to credit from an MFI bank or a supplier. With financial offerings provided by fintechs like ShopUp, corner shop owners now have access to on-time inventory, short term loans, and cash flow management offerings to grow their businesses and better serve customers.
In other emerging markets, similar innovative, scalable fintech business models have generated positive outcomes. In Latin America, Dinie provides a digital embedded lending infrastructure for small business loans in Brazil. And MaxAB, an online inventory supply and logistics app company based in Egypt, provides multiple benefits to its 50,000 customers with 73% reporting saving time, 53% getting access to competitive supplier pricing and 70% reporting an increase in store earnings.
Renewed Focus and Investment in Fintech Entrepreneurs and Beyond
This is just a glimpse of the inspiring work from the founding teams we partner with every day. To date, we’ve invested in 71 leading edge fintechs, as well as 18 ecosystem partners, such as the Alliance for Innovative Regulation (AIR) that has organized over a dozen hackathons to help financial regulators explore the opportunities and risks emanating from embracing new technologies in order to better the financial system for all.
The work of our portfolio companies has helped improve the financial well-being of more than 250 million people and businesses worldwide. However, we realize there is still plenty more to be done – especially in light of the lingering effects of the COVID pandemic, global conflicts, and climate shocks that are causing alarming increases in household vulnerability. Digital financial services are lifelines for people and businesses facing emergencies like a health crisis or a natural disaster, as they facilitate access to social safety net programs, payments, credit, and even healthcare.
We are eager to roll up our sleeves and continue to work hard at supporting visionary entrepreneurs whose success will push the financial system to do better by its customers in the years ahead. With our fresh capital, we will build on our past learnings and double down on the entrepreneurs and ecosystem innovators who are forging a bold new and fair financial system.