Matt Schaar_E13: Tip of the Spear in Fintech [8–31–2020]
Matt Schaar, Director of Portfolio Engagement at Accion in D.C. [8–31–2020]
Note: References with links are listed at the end of the show notes.
INTRO:
2:00 Shares experience of being an Aerospace Engineer. Talks about transition into getting a Masters of Public Policy and inspiration to work in non-profits / impact. Draws the analogy of rapid speed iteration (different than Aerospace), and found an inspiration for early stage startups in both Detroit and NY. Worked in a few startups, and got excited about helping Founders build their ideas. Capital combined with support and consultation, became his focus.
6:00 Shares experience growing up in South Dakota. Credits willingness to explore from his parents, and pursuing things on his own. Built his own perception of the world from scratch, and thinks of Entrepreneurialism as discovering new aspects of life. Talks about his connection with religion and social impact.
9:00 Talks about story, voice, and unique views outside of individual control. Talks about privilege of race, language, and gender as a systemic issue.
SECTION1: Non-Profit Microfinance
10:00 Talks about Accion’s 60 year history, and inspiration from Muhammad Yunus, and the connection to University of California. Talks about Accion’s mission around Inclusive Fintech and the roots of Sustainable Microfinance. Accion works with large institutions to map out their microfinance systems, that are beneficial to underserved demographics.
12:17 The movement toward FinTech 10 years ago, Accion started looking at Ag solutions — consumer loans, biz loans, and nanobanks. Decided to put more capital behind Venture Lab to become an institutional investor.
13:50 Talks about how impact is tracked at Accion. For example, where banks can track via digital banking. We discuss the why of non-profit finance, and the expected returns on funds. Discussed the Global Impact Investors Network. Also discusses the differences between for profit and non-profit venture.
17:00 Talks about the advancement of technology and keeping interest rates low in social impact.
SECTION2: Accion Venture Lab
18:00 Talks about the mission of venture lab, as first institutional investor. Talks about the stage of the Venture Lab. Talks about scaling the VC arm, and how to lay down foundation and test what works. Matt serves as a support structure for their Founders. Talks about their 100 day plan, to align on strategy, setting up culture / hiring / GTM.
22:00 Talks about having a seat at the board, and having more influence in the outcome of their companies. Mostly outside of US. Believes there are opportunities in the US, and has a great set of partners. They co-invest with some Bay Area investors with deals overseas. Puts Founders first in their co-investments. Discusses due diligence feedback systems they use in improving their internal process of working better with portfolio companies.
24:30 Talks about work with Pula recently, and how automatic insurance is attached to agricultural products, just by scanning barcode. Discusses recent investment in NowMoney — a neobank in UAE. Discusses how bank partnerships tie into NeoBank, with non-physicality.
27:00 Looks at post-exit metrics from the lens of upfront measurement of creditbook of each company — e.g., scale, health of lending services. Helps set goals with startups, then put trust into individual Founders. They sometimes exit earlier, and like to partner with impact investors that are aligned with Inclusive Finance — connecting the Founders to align with responsible future partners.
SECTION3: Philanthropic Venture
30:00 We discuss the tradeoffs of optionality or risk using the non-profit model versus the traditional VC approach. Their view of non-profit may be just part of their history, but wants to include as many as possible in the process of welcoming in co-investors.
32:45 Discusses Philanthropic Venture and the ways it can be leveraged to scale businesses in different ways. Points to Philanthropic Venture as a way for Founders to maintain control and control for responsibility. Talks about goals, and setting goals along with mission of organization. We discuss some of the revenue share models emerging, with an equity conversion component.
37:00 Talking about ethics in maintaining integrity within Inclusive Finance. Points to getting to know Founders and understanding their unit economics. Looks at who the Founders are targeting. Consumption Loans versus Essential Services is an important distinction. The aim is to improve livelihood of individual users. Highlights Sustainability as the core focus downstream.
40:00 Talks about the impact from Pandemic, and how many partners are returning to a semblance of normalcy — good news! Matt’s looking optimistic about his companies. They are still investing, and trying to identify how companies are adapting through the crisis. Points to savviness and resilience of entrepreneurs they work with.
SOURCES:
-Matt Schaar: https://www.linkedin.com/in/mattschaar/
-Founders who want to pitch: accionventurelab@accion.org
-Matt’s journey into VC Impact: https://medium.com/@mattschaar/how-an-ex-silicon-valley-product-guy-got-into-impact-focused-venture-capital-11eb3e0eec9e
-Accion Venture Lab: https://www.accion.org/how-we-work/invest/accion-venture-lab
-Financial Inclusion https://en.wikipedia.org/wiki/Financial_inclusion
-Microfinance History [Guardian 2008]: https://www.theguardian.com/katine/2008/jun/03/livelihoods.projectgoals1
-World Bank [Underbanked 2017 report]: https://globalfindex.worldbank.org/#about_focus
-The End of Poverty [Jeffrey Sachs]: https://www.amazon.com/End-Poverty-Economic-Possibilities-Time-ebook/dp/B007ZHC6H6/ref=sr_1_1?dchild=1&keywords=the+end+of+poverty&qid=1598488598&s=digital-text&sr=1-1
-Globalization and its Discontents [Joseph Stiglitz]: https://www.amazon.com/gp/product/B001RVFLJ6/ref=dbs_a_def_rwt_bibl_vppi_i3
-Sustainable Microfinance [McKinzie 2004]: https://mackinstitute.wharton.upenn.edu/wp-content/uploads/2013/01/2003_2004___Kulik__Natalie__Molinari__Patrice___Sustainable_Microfinance_and_Technology.pdf
-Accion Center for Financial Inclusion: https://www.accion.org/program_teams/center-for-financial-inclusion
-Tala: www.tala.co
-Kiva: https://www.kiva.org/
-Global Impact Investing Network [GIIN]: https://thegiin.org/
-Pula: https://www.pula-advisors.com/
-First Access: https://www.firstaccess.co/
-Toffee: https://toffeeinsurance.com/
-NowMoney: https://nowmoney.me/
-NeoBank [Wiki]: https://en.wikipedia.org/wiki/Neobank
-MacKenzie Scott Donation to Accion: https://www.prnewswire.com/news-releases/mackenzie-scott-makes-largest-gift-in-accion-opportunity-funds-history-accelerating-support-for-businesses-owned-by-people-of-color-women-and-immigrants-through-15-million-grant-301108107.html
-Lendable: https://www.lendable.io/
-Triodos: https://www.triodos-im.com
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Song Credit: The Croft — By Joakim Karud
[ No Copyright on Music and Creative Commons — Attribution-ShareAlike 3.0 Unported — CC BY-SA 3.0 ]
