Inclusive Fintech: What we can learn from 400 early-stage companies
Over the course of six weeks, we received 576 applications to the Inclusive Fintech 50 competition, of which 400 met the eligibility requirements. The patterns observed among these 400 early-stage inclusive fintechs provide a partial portrait of the wider inclusive fintech ecosystem in terms of diversity, types of innovation, and funding, among other things. More details will be released in our forthcoming white paper, but in the meantime, we are glad to share key learnings about the eligible applicants below.
In terms of investment, fintechs offering credit products (28 percent of applicants) outraised the other groups, accounting for USD 292 million of a total USD 805 million. Yet, investors are still interested in other product categories when it comes to inclusive fintech, as investments in payments and remittances solutions (26 percent of applicants) totaled USD 183 million. Applicants providing savings and personal financial management solutions (18 percent of applicants) raised USD 171 million. Infrastructure and insurance fintechs raised much less, which could be due to disparities in total addressable markets, revenue generation potential, or a number of other factors. Keep an eye out for the white paper, where we dig into several factors affecting funding concentrations – not only across products but across regions.
As a matter of fact, geographic distribution, when defined by country of headquarters, is relatively balanced save a few outliers: 52 applicants are from East Asia and Pacific, 55 from Europe and Central Asia, 44 from Latin America, 25 from the Middle East and North Africa, 59 from North America, 44 from South Asia, and 110 from Sub-Saharan Africa. When that data is parsed further, 53 percent of applicants are based in a lower-middle income country while 47 percent of applicants are based in a higher-middle income country. The former accounts for 47 percent of all funding against the latter’s 53 percent; the customer split almost perfectly mirrors this ratio as well.
Lastly, data collected on the founders of eligible fintechs unearthed trends consistent with the general fintech space. While 72 percent of founders held previous roles with a technology company and 85 percent had relevant experience in fintech or financial services, the startups in the applicant pool were more often led by men than women. Women-led fintechs – defined as companies with at least one female co-founder or executive – comprised less than a quarter of eligible applicants. North America had the greatest proportion, while the Middle East and North Africa registered the lowest. As many industry analysts have noted, leadership diversity can lead to better business outcomes.
As we found, these inclusive fintechs are opening the door to serve new segments in a variety of ways, introducing innovations not just through technology but through distribution channels, data analytics, and better designed products. But these startups also need the capital and knowledge resources in order to scale and reach the 3 billion financially underserved.
Scroll down to view an infographic of the applicant pool, and sign up for email updates below to get the white paper when it’s published!
Inclusive Fintech 50 is funded by MetLife Foundation and Visa Inc. with support from Accion and IFC. Click here to see the full list of winners across categories.