While fintech startups are having a moment in terms of declining venture capital deals and layoffs, Quona Capital, a venture capital firm that invests in emerging markets accelerating financial inclusion, has discovered that there is still an appetite for fintechs.
The firm closed on $332 million in capital commitments for its Fund III, which invests in companies in Latin America, India, Southeast Asia, Africa and the Middle East. Notable exits from its first fund were IndiaMart, which went public in 2019, and Coins.ph, which was acquired, also in 2019, by Gojek.
The commitments for Fund III exceed the $250 million target Quona was initially seeking and bring the company’s committed capital to more than $745 million, co-founder Monica Brand Engel told TechCrunch. He started Quona Capital in 2015 with Jonathan Whittle and Ganesh Rengaswamy.
“We were very lucky because the digital thesis about bringing technology to help affordability, it also helps connectivity in a world where we’re more remote, where things are built, and we’ve had a lot of success,” he added. “So even the fundraising is a testament to the results and that Fund III is a $332 million fund.”
Brand Engel, who leads Quona’s investments in the Africa and Middle East regions, said the fund’s investors include most existing investors from sectors such as global asset managers, insurance companies, banks commercial and investment, university endowments, foundations, family offices and development finance. institutions It also includes 20 new investors, the firm said.
While speaking to LPs during the fundraiser, he noted that one of his main concerns was investing in emerging markets: how risky it is and how it is affected by current events, for example the war between Russia and Ukraine and the government instability in the United Kingdom.
“People are realizing that you are not immune to macro instabilities,” Brand Engel said. “However, there is an appeal from emerging markets and the pent-up demand for basic goods and services that early adopters can adapt with technology.”
He noted that the driver for starting the new fund is that financial inclusion “is a huge and powerful lever for impact” for a movement that started with Accion in microfinance and is now having a 2.0 moment with innovative new approaches of startups that are “radically”. the improvement of access and quality of financial services”, for example, integrated financing or the connection of financial services with other business models where these services become “the engine to drive growth”.
One of the other areas where it considers Quona Capital’s thesis to “shine” is in what the firm calls a “global locale” with offices in more than 10 countries.
“Part of our value proposition is that we have people who are very integrated into the local market who speak a language, who were born there and had children there,” said Brand Engel.
Quona Capital funds have made more than 65 investments and will make 25-30 new and follow-on investments from the third fund. While the company has moved somewhat away from consumer finance, it has gone all-in on the business-to-business business, he added.
Some of the first six investments in the new funding have gone to companies such as Egyptian financial superapp Khazna, MoHash, a decentralized funding protocol, Pillow, which aims to make it easier to save and invest in cryptocurrency, and nocnoc, which helps global marketers connect with Latin American markets.
“We call ourselves a true impact investor that focuses on numbers, KPIs and building real business models to be profitable and impactful in a way that’s kind of bottom-up,” added Brand Engel. “Also, the idea that we are operators and have started, scaled, and exited financial services and technology companies gives us a very important perspective. Not only do we have empathy because we’ve been entrepreneurs ourselves, but I’m Latina and the daughter of immigrants, and we are building something that really reflects reality.”