VC10X - VENTURE CAPITAL PODCAST
Venture Capitalists (VCs) & Angel Investors share their investing thesis, screening process, value-add, exits, and more. Hosted by Prashant Choubey (@ChoubeySahab)
Liza Curcio-Rudy is a Portfolio and Investments Associate for Accion Venture Lab. Liza supports and leads investments in early-stage fintech companies, guides our portfolio companies through strategic projects and engagement activities, and supports additional fund initiatives around gender lens investing and LP engagement. She is also responsible for the assessment of new investment opportunities and the development of investment theses, particularly in the US market.
We talk about:
Liza's story & how she started investing?
It really goes back to college for me. When I started college, I was really interested in international development and thought maybe I'd go work for a non-profit or in the government sector. But my sophomore year of school, I did a program on social innovation in business and through an internship at a fund of funds called Oleoman Capital, really learned about the ability for VC and the private sector and investment capital to have an impact on the issues that I cared about. So from there, I really didn't look back. Spent two years at Illumen Capital while I was in school, and then after school did a program called Venture for America, which is focused on creating economic opportunity in second and third tier American cities.
So worked at the New Orleans Bio Innovation Center, investing in life science startups that wanted to create economic opportunity and jobs in the Southeast before moving to Venture Lab, where I work now.
Financial Inclusion landscape around the world
So still around the world, there are more than 3 billion people who lack access to sufficient financial services. So we're talking more than a third of the population. But over the last, say, five or ten years, the term financial inclusion itself has really changed. So before where we were talking specifically about do you have access to a bank account? Do you have access to insurance products?
Now, we think a lot more holistically about financial health. So not just can you open a savings account, but what does it look like to really improve resilience, to build those savings and to meet customers in a way that's contextualized and where they're fully engaged and fully educated on the process?
How is Accion is drive financial inclusion?.
So Accion itself is a 60 year old nonprofit, really a pioneer in the microfinance space. But around ten years ago looked up and saw the opportunity for fintech and fintech startups to address a lot of the problems that they were previously working on through microfinance institutions. So started Venture Lab, which is the fund that I work for, to be the seed stage investment arm. And a lot of times we solve for these problems by essentially investing in models that are at the intersection of fintech and other sectors like education, agriculture, logistics.
So just to give an example, one of our newest portfolio companies is actually in India and a company called Aqua Exchange. And they produce IoT enabled farm equipment for shrimp and fish farmers on the coast. And that equipment helps farmers reduce their failure rates because they're able to monitor the farm 24/7 they get notified if there's any sort of malfunction, which is one of the biggest reasons for crop failure. So that helps them boost their income, but then it also provides Aqua Exchange with the data they need to underwrite affordable contextualized financial services that just really meet customers where they are and in a context that they understand.
What boxes do these companies need to tick to get investment from Accion?
So there are a few of course, like most investors, one of the things that we care most about is obviously the team. These are long term relationships, people that we're going to be working with for the next decade. And a lot of times it's not just people that we want to work with and people that are kind of high performers that we believe in, but also founders with differentiated experience that gives them sort of a unique angle and a unique ability to solve the problem that they're tackling.
But more specific to our work. At Venture Lab, there are two things that I think kind of differentiate our investment thesis in particular. One of them is that we look for companies that find ways to balance innovative technologies and sort of increasing digitization with also this sort of human touch along the customer journey. So for customers that have really been excluded or not well served by the formal financial system, we've seen that it's super important for startups to have that human touch component that helps them acquire customers, retain customers, but then also just reach their impact goals along the way.
Some Accion portfolio companies working on important problems?
So I mentioned one in the AG space. Based company now called Good Find, which is building a vertical SaaS tool for food trucks. Food trucks have a limited shelf life, so limited shelf space, they have collateral in the form of a truck, but oftentimes due to banks not being able to formally see cash flows. Also just high acquisition costs for banks and kind of lower ticket sizes, it can be really hard for food trucks to access financial services. So Good Find provides initially a point of sale system that enables food trucks to run all of their transactions through their tech platform. They also provide food trucks with ways to find new events to go to and data that helps them determine kind of how they can increase their operational efficiencies. And then on top of that, because they have all of this transaction data, again, they're able to layer on those financial services and provide food trucks with kind of everything that they need to operate.
How do different investment vehicles at Accion work?
Venture Lab is the seed stage arm of Accion, and then we have another fund called Accion Global Investments. So what they do is they make equity investments in Marco finance institutions and other sort of innovative financial institutions that are reaching the customers that we care about. So they'll provide strategic support, operational support and then also help those institutions digitize their operations so that they're able to better reach customers and provide also just more affordable financial services.
Fintech landscape in United States
So we saw that COVID played a huge role in increasing just digital adoption of financial services in the US. But the landscape is quite competitive, which has led to really high customer acquisition costs. So in the US. What we like to see is companies that have innovative acquisition strategies that help them reach healthy unit economics. So that could be on the consumer side, but it could also be on the side of supporting small businesses. And that's sort of the same reason that we're excited about companies like Good Fund, which I mentioned, that are offering vertical SaaS. They're able to speak specifically to a niche customer segment, which helps them acquire customers, and then they can layer on financial services as sort of a new revenue stream.
Why do we still have 3 billion people financially excluded worldwide?
The core issue is kind of why are these customers not well served by financial institutions. And a lot of that comes down to the economics of how banks operate. So these are often low ticket sizes, which means that banks need to acquire these customers for less money, essentially, than they're going to make on the transaction, which at these ticket sizes can be difficult. And then on the acquisition side, we're talking about customers who in a lot of instances, especially in emerging markets, are geographically dispersed.
They might be in a rural area, or they might lack access to a smartphone. So a lot of it comes down to how can we leverage technology to improve the economics of serving these customers and do so profitably and in a way that's truly inclusive.
Added by host: I'll tell you one very interesting way how I've I've seen financial inclusion shape here in India. So we have these big fintech companies. One of the very popular ones is Paytm, which has kind of revolutionized payments at the very grassroot levels. So when you go out, there are street vendors everywhere. Earlier you had to make the payments in cash. But now this company, Paytm or multiple other UPI companies have put up the QR codes on these calls so you can just scan them and then the money goes directly to their banks, their respective banks.
So earlier, these people might not even have a bank account, but now they have a bank account. And for the convenience of this technology, and initially I was sceptical, I didn't think that they're going to come in on this technology because they like hard cash. They like to feel the cash. And they don't trust if that money is actually going into their account or not. So I love how they implemented it and how a big part of the population is now included who are basically day to day wage workers are now included because of this technology.
Rapid Fire round
What are the sectors and regions you invest in?
So we're focused on financial inclusion and fintech globally. Our core regions are the US. India, Southeast Asia, Africa and Latin America.
What's the typical stage you invest in?
We're focused on pre-seed and seed.
What's the typical check size?
Anything between 5000 and a million dollars.
Where can founders pitch you?
Yeah, me personally, on my Linkedin or email. It’s public on my LinkedIn profile. We also have a public email address on the Venture Lab website that founders are welcome to address.
Where can our listeners follow you?
LinkedIn is probably the best place for me.