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Fintech has the power to build a more inclusive world. Fintech for the People is about the innovators who are developing fintech solutions that reach the people who’ve been left behind. In each episode, we’ll hear from innovators who are creating financial solutions that bring every person the financial tools they need to grow their business, support their family, and build their community. Together, we’ll learn how fintech looks different in spaces and places where basic financial services are a luxury — and how solutions to address these challenges require a different level of creativity, empathy, and execution.
Fintech for the People is an Accion podcast hosted by Amee Parbhoo, Managing Partner of Accion Venture Lab – an early-stage investor in inclusive fintech startups. Learn more about Accion Venture Lab here. Episodes will be released in seasons, on a weekly schedule.
Amee Parbhoo (00:11):
Hello, and thanks for tuning in to our final episode of Fintech for the People, season five. Fintech for the People is brought to you by Accion Venture Lab, a global early stage investor in inclusive FinTech startups around the world. I'm Amee Parbhoo, your host and managing partner of Accion Venture Lab. In this season we've been talking to different ecosystem players about Climate Fintech, a relatively new and exciting area of FinTech that aims to address one of the biggest challenges we face today, climate change. Last week we chatted with Abhishek Gupta, co-founder of Semaai, about the challenges in the agricultural value chain and how his team in Indonesia thinks about climate risk issues when they're developing solutions for their customers.
(00:59):
Today I'm excited to welcome Lyndsay Holley Handler, co-founder and managing partner of Delta40 Studio based out of Kenya. Lyndsay has worn multiple hats over her career, both as entrepreneur and investor, and she's deeply passionate about building life-changing businesses in Africa that not only improve quality of life, but also environmental sustainability. Thanks for joining us today, Lyndsay. It's a real pleasure to have you.
Lyndsay Holley Handler (01:26):
And thank you for having me on the podcast, Amee.
Amee Parbhoo (01:28):
Super. Well, I'd love to start first with your journey. So, tell us how you got into this space. You've worked here for many years in different roles as an entrepreneur, an investor, now a venture builder. How did you get to where you are today?
Lyndsay Holley Handler (01:43):
My journey building ventures in Africa started in 2003, so 20 years ago this year. And I had the opportunity to travel to Tanzania and learn about microfinance and how we can invest in entrepreneurs to reduce poverty and bring life-changing products and services to the last mile. And ever since then, I have been blown away by the entrepreneurial spirit in Africa and the potential for building ventures that can change lives and tackle climate change in Africa. I spent the first couple years continuing that work, investing in rural entrepreneurs, and through that I just saw the power of the mass market and the informal small and medium-sized business economy in Africa and became really interested in, how do we better serve them? In 2009, I then was living in rural Kenya and my neighbor lost their house to a kerosene fire. And it was that moment that made me realize that I wanted to dedicate the next part of my journey to bringing clean, safe and affordable energy to the last mile.
(02:50):
And then I spent 10 years building a company called Phoenix to do just that, which I know we'll talk a little bit more about today. And then after that experience, really wanted to use my experience in building companies to continue investing in entrepreneurs that were solving the biggest problems on the continent. And through it all, I would say that a lot of people, when they think about Africa, they think about it needing charity to solve problems that reduce poverty. But I continue to just be inspired by using entrepreneurship as a way to change lives and also create a more resilient economy that can bring innovation even to the rest of the world.
Amee Parbhoo (03:30):
That's great. And I think you started to talk about just the time you spent building Phoenix. The pay-as-you-go solar space saw a significant amount of investment over the years and Phoenix was acquired in 2017. So, tell us more about Phoenix. Tell us about the customers you were serving and that impact of the solutions that you all were offering.
Lyndsay Holley Handler (03:51):
At Phoenix, our mission was to increase the quality of life of our customers by delivering clean, affordable energy and financial services. And we realized very early on that when we tried to deliver clean energy to the last mile in Africa, that the main barrier to adoption was financing and the ability to afford these products upfront. So, one of the things I've learned over time is that a lot of climate solutions come hand-in-hand with the need for FinTech innovation and business model innovation. And so, everyone at Phoenix was really committed to staying focused on low income last mile households. And that's one of the things that made us unique in the industry. It's very easy at times to kind of want to go upmarket in cities because there's larger margins, there's wealthier customers, but we really stayed focused on the last mile and that really ended up driving our strategy, ended up driving our aggressive customer growth and the unique footprint we had across Africa, and in every country we went into over time, nine countries across Africa.
(05:03):
To reach the last mile, we had to have a nationwide footprint in each market. And that commitment to the last mile of the map market, while hard in many ways because the margins are lower, it's harder to reach people, that commitment gave us a very large customer base making many small payments every day. And that was really attractive to some of our partners like MTN, who we worked very closely with to scale this innovation and to make it affordable to customers at the last mile. And then finally to acquisition partners such as RG. And so, in the end we offered not only clean energy, which was kind of our entry product into a household, but once we brought them solar power that was enabled by FinTech, we were then able to take that credit score and that relationship to offer them a range of other products and services, from appliances to clean cooking products, to agricultural products that help them increase their productivity.
(05:59):
And also financial service products, actually school fee loans, which was one of our most popular products. So, in the end, I think for those looking to build companies that are really at this intersection of climate in FinTech, in addition to building profitable businesses, one of the things we found is building businesses that reach a large number of customers, that create sticky relationships with customers and really can be of value to corporate partners, can be really powerful when looking for acquisition opportunities that can further scale these innovations over time.
(06:35):
And the final thing I'll say on Phoenix was that we never intended or wanted or set up the company to sell it, but what I've learned in Africa is that climate solutions do need a lot of capital to scale. They need a lot of equity, they need a lot of debt, and corporate partners such as RG bring a low cost of capital and a lot of capital to the table to be able to scale proven solutions. So, for entrepreneurs out there, I think it's the role of the entrepreneur and the innovator to develop these solutions and get them to profitability. And when you do, these corporate partners can be very powerful in helping to reach tens of millions of people.
Amee Parbhoo (07:11):
Interesting. That's really great feedback for entrepreneurs listening. Yeah. What is that right point? So, when did you start to develop that relationship with corporate partners? Was it even before that point of profitability or were they sort of not interested until they saw that proof point?
Lyndsay Holley Handler (07:28):
Great question. We, in the very early days explored partnerships with telecom companies like MTN, which is the largest telecom on the African continent. It's an African company, and we were very excited to partner with them because of a deep synergy we found. So, MTN's challenge at the time was providing power so that people could turn on their phones, receive calls and make calls. And so, their entire business relied on access to power. And in certain markets across Africa, 70 to 80% of the population does not have access to a reliable power source in the home. So, we decided to partner with them very early on because of their deep need for our solution and the benefits we could get from this partnership. When bringing a new product like this to a market that requires behavior change or trust such as a solar system, having a corporate partner that brings brand value and trust, distribution networks can be a great way for startups to accelerate and reduce some of their costs.
(08:30):
So, we did partner with MTN very early on and we remained close partners with them for 10 years throughout our scale up across Africa. Along that journey we also partnered with a couple other telecoms in other markets where MTN was not present as well, and those were all very successful. And I think the key thing I learned there is, the simpler you keep the partnership, the easier and the better. We did not start talking to large acquiring partners such as Anji until a little later in our journey. I think for strategic investors to come into your company as an early investor or partner, I think you do want to be a little farther along on the innovators journey.
(09:09):
So, Anji first invested in Phoenix in our Series E round through their social impact fund and that was a great way to get to know each other because they wanted both impact and returns out of this investment and we got to know a lot of people within the company. And so, I think that that is a great way for entrepreneurs to start to see if a corporate partner could be a good M&A partner down the line. But I would say that today we don't recommend that companies do that too early because those corporate partners also look for profitability and cash flow very early in the journey. So, there's some pros and cons to bringing them on as investors.
Amee Parbhoo (09:47):
Definitely. It's so powerful to hear the journey you had at Phoenix because in some ways, pay-as-you-go solar, it's been the first step in this Climate Fintech journey. It was really the first models that we started bringing together, the need for financial services in climate related solutions. One topic that we've talked a lot about this season is around the differences between solutions that are focused on climate mitigation versus climate resilience. How would you think about your work at Phoenix along those different pathways and along those different lines?
Lyndsay Holley Handler (10:23):
When you're all on the ground in Africa, I think that first and foremost we've tried to focus on climate solutions that have an immediate and tangible impact on income and quality of life and resilience here on the continent, because I think those solutions are the ones that are ultimately going to be the most scalable over time. At the same time, we all, as a global community need to really focus on achieving significant carbon reductions by 2030 and net zero by 2050. And so, really what I think is exciting to think about and a focus for a lot of us is, where do we find solutions that both build resilience and mitigate climate change on the continent and are delivered with business models that are truly scalable? So, I do think that ultimately we look at both, and I think both are very critical.
(11:20):
I think from a values perspective, I'll just say that as an entrepreneur and investor and leader on the continent, I don't think we can ever ask Africa to focus on and invest in carbon mitigation solutions that do not benefit people today. Africa is only responsible for 3% of carbon emissions, and over 60% of households at a very minimum are projected to have impacts on their income as a result of climate change. So, from my perspective, we need to put every dollar we can behind climate solutions that increase resilience and mitigate climate change concurrently.
Amee Parbhoo (11:58):
So, maybe take us to today, and given what you've learned through your leadership at Phoenix and these learnings around finding climate mitigation and resilient solutions, tell us about the Venture Studio you're building and what you're focused on today.
Lyndsay Holley Handler (12:14):
I think just one final note on the Phoenix experience that I wanted to add is that we always focused on two things at Phoenix that I think helped us really scale a climate solution. One is, does this impact the customer today? So, we looked at not only delivering a solar product that brought clean energy, but we always tried to develop a product that brought solar energy at a lower cost than what people were paying today because that is what's really going to drive adoption and ongoing use. So, for all of the entrepreneurs out there, the more you can think about what are people paying today for a product or a solution and how do we bring modern climate solutions that are even more affordable or create more income for people, is really critical. And in addition to that, climate solutions are often very human-powered and there's these companies that are built to deliver climate solutions, have hundreds and thousands of employees and sometimes tens thousands of commission-based agents across the continent that are selling, financing, and servicing these solutions.
(13:23):
And so, I also think we thought about, how do we give our employees at Phoenix ownership within the company for them to have the incentive and the motivation to really bring these climate solutions to their communities? And so, I think one of the most impactful things we did at Phoenix was give everybody ownership in the company. Everyone had shares, and even our sales agents who were commission-based had the ability to make an incredible income through selling these climate solutions. And when you have an entire workforce in a country with ownership in bringing this solution to the last mile, making it successful, you have the very people that need to convince communities of behavior change or of testing new products, you have this buy from the early movers and the thought leaders that you need. So, I just wanted to kind of just say too, that I think another powerful way to really achieve scale in the climate space, particularly in the FinTech space where a lot of this requires loans that need to be paid back over time, is to really incentivize the employees thoughtfully.
Amee Parbhoo (14:28):
I think that's such an important point. At Accion Venture Lab, we talk a lot about the tech-touch balance of solutions and a lot of FinTech may look all digital on the surface, but when you really dig into it, to your point, a lot of it's driven by human engagement, whether it's the sales team or service. And yeah, making sure those incentives are aligned I think is just such a powerful movement in the right direction. So, tell us more about Factor[e] Ventures and about your new Venture Studio, Delta40. What does Factor[e] focus on and what are your objectives with the Venture Studio?
Lyndsay Holley Handler (15:03):
Factor[e] Ventures is an early stage investor and venture builder that is focused on investing in technology-driven solutions in the energy, ag and mobility sectors. Our shared mission within the Factor[e] group is to increase incomes and tackle climate change by investing in entrepreneurs that are bringing disruptive innovation into these sectors. And in addition to capital, we provide hands-on support throughout the venture building process. And Factor[e] to date has invested in 30 companies that are all focused on decarbonization and improving livelihoods in emerging markets, with an early focus on India and Africa and has really seen several of these companies scale and has even realized an exits, which is quite unique for a climate fund. I joined Factor[e] in 2021 with the goal of helping them launch a Venture Studio that would take the venture building work that Factor[e] does to scale. And so, within the Venture Studio we are looking to invest in entrepreneurs even earlier in the venture building process than a typical seed investor can invest.
(16:14):
We are looking at investing entrepreneurs all the way from the ideation stage, with a focus on entrepreneurs with diverse backgrounds on the ground in Africa. So, we're looking at investing in African and female founders who are on the ground and really close to the customers and the markets that they're serving. And with the launch of Delta40, our vision is to be able to build a portfolio of technology-driven ventures in these sectors from the ideation stage that can go all the way through the seed stage with support from Factor[e] Ventures and can even receive growth financing from our new fund equator in the group all the way through the Series B. And we feel that if we can get climate ideas from idea to the Series B within Africa, there's going to be a lot more pipeline for some of the growth stage in private equity investors that we know are looking to really back in a big way, some of the most promising solutions.
Amee Parbhoo (17:15):
It does feel like, given the investor interest in climate tech that this is the moment to be building a startup in the space. Tell us about some of the solutions you're thinking about and also developing at Delta40.
Lyndsay Holley Handler (17:30):
In each of the sectors we work in, energy, ag and mobility, we do a mapping of the sector and we look at, what are the key problems that need to be solved to really unlock economic development and carbon mitigation and climate resilience? And then we look at, where is there already a lot of entrepreneurial activity? Where do we feel that there's innovation, there's scale happening? And we kind of let the market really continue to invest in and develop those solutions. Then we look at, where are there gaps? Where are we not seeing entrepreneurial activity but we feel a problem needs to be tackled, or even a part of a value chain within the ecosystem really needs to be developed so that all of the other companies in that ecosystem can be more efficient and can scale faster? And so, for each of these sectors we've identified our key problems that we want to solve, and we then do a call for co-founders in those areas.
(18:24):
So, we look for entrepreneurs that have kind of demonstrated commitment to solving those problems. They may be working in that sector, they may be a C-level at a fast growth company in that sector and they're ready to jump into entrepreneurship and start a company that approaches that problem in a new way, with a new solution. They may be actually in the early stage of building a company that's directly developing a solution and testing a solution but haven't raised capital or are having trouble raising capital, or they may be a technologist, they may be an engineer or a scientist that is actually developing solutions to these problems in an academic or in a corporate venture environment and would like to jump into entrepreneurship. And we're excited to connect with all of those types of founders, and after a vetting process, we bring them into the studio and we give them more meaningful time to understand the problem and test multiple solutions to each problem.
(19:22):
So, one of the things we also believe in is that these problems are so big that we cannot find a solution within 90 days for many of these. We also really believe in the power of testing multiple solutions before an entrepreneur kind of goes out to raise their first round of financing. We find that a lot of times entrepreneurs start raising money against their first idea, even before testing that because there isn't a lot of angel investment capital in the market to test everything before raising your first round. So, we really want this studio to be a place where experienced proven founders can spend more time understanding and tackling these problems without having to spend 50% or more of their time fundraising.
(20:08):
And so, we give entrepreneurs six to 12 months in the studio, we give them pilot investment to test solutions, and this all leads up to them pitching our investment committee for early stage capital to start building the venture. And once they have fraction building these ventures, we then are partnering with other co-investors to help them raise the capital they need alongside of our capital to really start scaling these ventures.
Amee Parbhoo (20:35):
That's so exciting. You talked with Phoenix about fundamentally that access to financing being so core to scaling and bringing the product out to customers. What are you finding in terms of the FinTech aspect of the solutions you're exploring now with entrepreneurs in the Venture Studio? In general, what are the specific types of solutions you're building or are excited to build?
Lyndsay Holley Handler (20:59):
Yes, great question. Actually, and I didn't mention FinTech as an explicit sector that we invest in, but we see embedded FinTech as a really important part of our investment strategy. And what we mean by that is, we invest in FinTech solutions that are empowering energy, that are empowering ag and empowering mobility solutions. And what I would say is, looking at the Factor[e] portfolio and looking at the first six ventures that we're building in the Delta40 Venture Studio is that more than half of the ventures we invest in have a FinTech element to delivering their solution to customers. As I said before, customer ability to pay for these solutions upfront in cash is one of the biggest barriers to adoption and we see that also in the US market. So, a lot of people say, "Well, that's really unique to Africa, this is a big risk."
(21:51):
But what we've seen that's really promising is that solar required really innovative financing solutions such as Sunrun, and required even government subsidies and support to really achieve scale. And so, at the Venture Studio we're really encouraging entrepreneurs to think about their customer financing solution and even some of the government partnerships they're going to need to enable these solutions at scale. So, to share some of the specific ventures that we are building and investing in the studio as an example, one of them is called Clean Crop Africa, and Clean Crop Africa is a company that is looking to increase agricultural yields and also increase the profits that smallholder farmers can receive from their crops, with a very novel technology that enables farmers and seed companies to decontaminate seeds and finished crops. And this is a technology that is being used in the United States in new novel applications to especially increase yields in low rainfall environments, which we are all facing around the world, but are especially concerning in Africa.
(23:09):
And this technology can also be used to remove contaminants of finished products that are really important to increasing the value of crops and/or human health. It is a cold plasma technology, which I can't get into the details on this podcast, but it's a unique cold plasma technology that has multiple applications that can really transform productivity for African farmers. And we are really proud to be working with Clean Crop USA, which is a Factor[e] portfolio company, to build a company through the studio that brings this novel technology to the African continent. And Amee, that's one thing that I think is quite unique about a studio, is that I think that one strategy we're excited about is to look for technologies in this clean tech revolution and this kind of clean tech investment boom that are being rolled out in global markets that aren't making it to Africa yet.
(24:08):
And to be a partner for those companies to test, adapt and build business models to bring them to customers at the last mile across this continent. So, that's one of the unique ventures we're building. Another venture that we're building, just to give some more color, is we have two experienced founders named Roy and LaBelle. Roy is from Kenya and LaBelle is from Ghana. They met in an accelerator program a couple of years ago. They built their first venture through that accelerator program. It was a FinTech company serving small and medium-size enterprises, and they actually took that company through an acquisition to one of the large fast-growing startups here in Africa that needed their solution to scale. And after this experience, they knew they wanted to start another venture together, and they decided after several brainstorming sessions that they wanted to build a venture in agriculture.
(25:04):
But one of the things they found was that it was much harder to raise the capital they needed for an agriculture venture than it was for a pure digital software product. And they needed more meaningful capital, they needed more technical support, and they needed more runway and time. To test an agricultural product, you have to get through multiple growing seasons and they needed more capital support and technology to do this. And so, we connected with them as they were looking at partners to build this venture with and we're very lucky to have them come into the studio to build their first ag company. And we're really excited about working with experienced founders on the continent. There's a lot of incredible leaders, incredible entrepreneurs that are looking to build their second and third company, and still even they lack access to capital to do this. So, we're just excited to be a partner for entrepreneurs like that.
(25:53):
And in the studio, I can't say much about what they're building because it's still very early, but I'll say that they're looking to solve the problem of how to increase the profits that smallholder farmers receive. What we are finding is, smallholder farmers sometimes receive only 10 to 15% of what the final product is sold for in many of these value chains. And we believe that Taran Lemer can actually create more refinishing fees in many of these value chains with both software and other ag technologies that they're testing right now to deliver, at the end of the day, more of those profits back to the smallholder farmer. And so, they are about four months in to building their venture.
(26:35):
While I can't say much about the solution yet, I can say that within four months they already have an MVP, a minimum viable product. They have paying customers, they have revenue, they have a growing team, they have office space through the studio, they have access to finance and legal support, and they are moving incredibly quickly. So, those are just two examples of the kinds of ventures and the kinds of founders that we're excited to be supporting and amplifying in the Venture Studio.
Amee Parbhoo (27:04):
That's incredibly exciting. And just tapping into the wealth of entrepreneurial experience at this point in Africa. There are entrepreneurs we know who have successfully built companies, sold them, and are excited to continue building something in the future. So, it's great that the Venture Studio is finding them and helping them on that journey for their next entrepreneurial endeavor. I'd love to talk next about how you think about impact. One topic that's come up over this season is sort of the risk of greenwashing, particularly as those of us in FinTech kind of come into the climate space without perhaps the appropriate or comprehensive climate lens. Could you share, how do you evaluate the impact of particularly companies with that embedded finance layer? How do you evaluate them on that climate change element and what are some of those metrics you use to measure success?
Lyndsay Holley Handler (28:02):
That's a great question, and I think that given that our mission is to increase incomes and tackle climate change, we really look at impact measurements on both fronts. So, we look at, one of the metrics I'm most excited about is impact on net income. And so, it could be measuring the way solutions increase net income, agricultural solutions have the potential to increase income significantly, but it also could be looking at the way a climate solution reduces a household's expenditures, because if we can open up that wallet share, it really creates room for other investments and is ultimately greater additional net income. So, we look at the impact of any solution in both fronts on a customer, on a household level. And that's to me one of the most important metrics because again, if we can create net income, it also means the solution is very much more likely to be scalable and profitable, and thus kind of be able to attract commercial capital behind it over time.
(29:01):
The second thing on the carbon front and on the climate front is that we do look at just the CO2 mitigated bias solution and we have an in-house expert, the Factor[e] founder Morgan DeFoort has spent 20 years thinking about how to measure carbon emissions. And so, we rely heavily on their methodology for that and we do along those lines, I think it's really important at this time to start verifying some of these assumptions and the impact that a lot of these solutions have. We see a lot of carbon financing coming into these sectors right now, and I think that there's a risk if we don't verify the impact on carbon emissions, that there could be some backlash to that financing coming into the space or to FinTechs calling themselves climate companies. So, we really are looking as well at not just kind of running analysis on a potential solution and trying to understand in a spreadsheet what that looks like, but how do we verify that?
(30:00):
So, on that front, I think there's some really interesting work being done on how we use IoT technology, sensor technologies to verify carbon emissions that are being mitigated by these solutions. And so, we're very excited about being a leader in that space. Even, I can say that we are building a venture in the studio that is going to help many companies across the continent measure and verify their impact on carbon emissions in order to gain access to this carbon financing. So, I think that those are some of our kind of core metrics. And I'll just say one more, is that measuring, when we're talking about climate and our impact on climate change and resilience, I think measuring carbon alone is not enough. So, we're also looking ahead to, what is the impact on biodiversity? Because if we just look at carbon, there could be incentives to plant very dense eucalyptus forests or forests that aren't necessarily best for the biodiversity of an area, which we know is really critical to the kind of human development and health over time. So, I think that it really is time now to go beyond just simply carbon emissions.
Amee Parbhoo (31:18):
Super. Well, just kind of building on the metrics, again, with climate resilience, that's such a more amorphous thing to measure. I'm curious what metrics you're thinking about to get to the resilience of a community who is vulnerable to climate shocks and stresses. What metrics are you or the industry more generally thinking about to measure that?
Lyndsay Holley Handler (31:42):
One of the things we look at with the different solutions, like I said, is just the ability to increase incomes because we have a fundamental hypothesis that if we can increase incomes, we reduce the impact of future climate shocks. And I think that beyond one of the things that excites us about Clean Crop Africa is that we are looking for solutions that directly address those threats that are going to affect resilience. So, we know that rainfall and the volatility of and reduction of rainfall, or in some cases the opposite, too much rainfall causing flooding is one of the core drivers of climate impacts on households here.
(32:24):
So, how do we map out, what are the biggest threats to climate resilience and how do we develop solutions that address those, is something that we do actively in our thesis development. In terms of measuring one's climate resilience today, I will be really open with you, Amee, and we don't have a metric for that. And if anyone on this podcast listening does, we welcome you to send those ideas to us. And if any other guests offered some great ideas, we would love to learn from them.
Amee Parbhoo (32:51):
Yeah. No, that's something I think is, maybe what we all as an industry spend some more time on because it does feel like there's this shift of saying, "Look, let's not just focus on climate mitigation, let's focus on climate resilience, and how do we all measure that's actually happening with some of the solutions we're starting to build or starting to see scaled?" So, agree with that open call to anyone listening with ideas there. So, you talked a little bit earlier about the role of the public sector in helping kind of scale climate solutions. Tell us more about some of those pressing regulatory issues facing Climate Fintech in Africa and how do you think those need to be addressed?
Lyndsay Holley Handler (33:30):
Yeah. I'm not a policy expert, but I can say that I think that government is going to play a critical role in seeing any climate solutions achieve scale, and particularly in sectors like energy and agriculture and transport, if you look around the world, the government has played a critical role in helping solutions in those sectors reach the last mile. So, in America for example, we brought the grid to the very last mile of the country with a lot of subsidies and a lot of government investment and infrastructure. And in Africa, we often expect that we're going to bring electricity to the last mile with huge equity returns for investors without those subsidies. So, I think starting with the first thing I'd love to see in policy is really thoughtful policies and programs around how to deliver the climate solutions that are really core to economic development, such as access to electricity, such as access to agricultural inputs and even agricultural market linkages that are really important for these countries.
(34:41):
So, there's a really important role the government can play. On the FinTech side, I will say, I feel that the government both needs to think about how to increase access to FinTech, but I also think, as we've seen over the past 10 years, it's really important for them to make sure there's strong regulation in place that protect consumers. So, how do we make sure interest rates are reasonable? How do we make sure customers understand the financial services that are behind these climate solutions and that there is consumer protections? Because we could over-indebt customers if we put financial services behind all of these solutions.
(35:20):
So, I think that on that front there's a balance to strike. I will say that I think the more that customers have access to mobile money and improved banking solutions for low income populations, I think that that alone is going to really increase access and the success of some of these climate solutions. But there's just, I think an ongoing role for governments to play in making sure they're done responsibly, as we are seeing in the US right now. So, I'd be remiss not to mention what happened with Silicon Valley Bank, and I just think it emphasizes the importance of government regulations that ensure the financiers behind these solutions can remain solid for the customers they're serving.
Amee Parbhoo (36:10):
You talked a little bit about the role, the way in which entrepreneurs should approach corporate partners, which I think was really great advice. What other advice would you give venture builders and investors and entrepreneurs who are just starting to explore the Climate Fintech space?
Lyndsay Holley Handler (36:26):
Well, first and foremost, I think there are a lot of incredibly talented leaders, engineers, scientists and builders that are on the continent and well-positioned to build solutions in this space. So, I think my biggest piece of advice is that if you have a passion for this and if you have ideas that you want to explore, I encourage you to jump into the entrepreneurial ecosystem and test your ideas and build companies in this space. Simply, we need a lot more talent in this sector, taking leadership roles, taking risks, and even if you fail, there are really important lessons and impacts on the ecosystem that can be shared. And so, I think what we hope to do at Delta40 is be a partner to people who are really excited to build ventures in these spaces. The other thing I'll say, especially want to just call out to women out there, I need a lot of really talented female leaders that I think could have an enormous impact on this space.
(37:32):
They can build fantastic teams, they have big visions, they build really responsibly, they think carefully about every dollar they spend, and I think they can build really high impact solutions that are profitable and investable, but we don't see enough women jumping into this space. I will say to all the women out there, even when we do calls for co-founders and we encourage women, only 20% of the respondents are women and we want to see more. So, I think first thing is, explore taking this leap and then once you do take the leap, the two biggest piece of advice I have is, build the right team. So, I think that teams make all the difference in these spaces. There are hard problems to solve. Figuring out both the climate solution and the FinTech solution together is incredibly difficult. Each one of those pieces is hard. So, you are going to need a team around you, you're going to need an exceptional co-founder or two exceptional co-founders.
(38:31):
And so, I would say, find the people that you are really excited to build solutions with and that complement you and just focus on bringing that team together, investing in that team, developing that team, building a great culture because it's a long journey from idea to anything at scale. And that's also the most fun part. So, that's kind of my first thought. And then my second piece of advice is, get as close to the customer as you possibly can be. When I started building Phoenix, when I started to become passionate about solving climate problems, it was when I was living in rural Africa. I lived in rural Kenya on a 50 watt solar home system for many years and I got to know the problem firsthand. I got to know the customers firsthand, and really feeling that problem and understanding at a deep level helped drive so many of my insights for the next 10 years.
(39:26):
But it also is what helped me keep going when things got really tough, because you just go back to those customers who now you know in depth, have personal relationships with, empathy for, and a deep understanding of, you keep building for them. And I think that not only does it help you get through the hard times, but it's what makes the best company. So, if you can, go live with the customers you're trying to serve for three months. And I know it sounds crazy, but I really think that's one of the best ways to build a great company and do that with that amazing team that you want to spend the next decade building with. So, those are two thoughts, Amee.
Amee Parbhoo (40:01):
That is all such great advice and I second all of it, particularly the call to women to step up more in this space. That's great advice on the entrepreneur front. I guess now just blowing it out a little bit, the urgency of the climate crisis is very real. We know something like 3.3 billion people are climate vulnerable. What's your call to action, especially for the inclusive FinTech industry, which is all sort of trying to make sense of and get into more of the climate space? What's your call to action to us?
Lyndsay Holley Handler (40:34):
A call to action for the inclusive FinTech industry. First and foremost, I'm really excited to see a lot of FinTech investors starting to invest more specifically in the climate solutions. You see Quona, who now has a really explicit strategy as a leader in the sector to kind of invest in embedded solutions. And so, we just need to see more, I think FinTech leaders and investors thinking about how to apply the successes in the FinTech industry towards solving some of these big climate challenges. And I think one of the things that I'm most excited about is, how do we really put financial products behind actual technologies and products and services that are going to help customers directly address some of these threats to climate resilience? So, I think 20 years ago I was in the microfinance industry and it was all about giving loans to customers to help them start businesses and pull themselves out of poverty, increase their economic resilience.
(41:36):
And I think that they're still a really important piece of the FinTech puzzle, but I think what we need to do today is start to understand which technologies are really going to make a needle-moving impact on climate resilience and carbon emissions in Africa. And we need to, I think, try to direct as much financial innovation behind these proven technologies, because I don't think we're going to solve this today with just loans alone. I think that we do need to identify really impactful technologies and solutions and back them in a big way. And then when we have those, I will just say, we're going to have to think really creatively about how to make sure that we provide those financial services for those known solutions to the poor and to the last mile, no matter how hard it is.
(42:25):
At Phoenix, everyone kept saying, "You know, Lyndsay, getting to the last mile is so hard, it's so expensive. You're only getting five to 10 cents a day for your solar solutions. Why don't you just focus on the upper and middle class?" And that is where the returns look better and that's where the risk is lower. And all of these FinTech players could easily do that and focus on those customers. But I just want to put a call out there to the inclusive FinTech leaders that if we start with focusing on the last mile and the hardest customers to reach and we commit ourselves to doing that, we can then march our away to the cities.
(43:00):
And this was something, one of the best MTN CEOs, he was the CEO of MTN Uganda, and I said to him, I said, "What do you think has made MTN so successful in Uganda and other African markets?" Because it had by far and away the largest market share. He said, "You know what? We started with the last mile, the hardest customers to serve, and then we marched to the cities." And I just want to put a call out there to everyone is, let's start there because if we don't, we will never get there and we will fall short of our goals.
Amee Parbhoo (43:29):
Well, with that, thank you so much Lyndsay for this wide-ranging conversation. It's been really great to get your insights on this space.
Lyndsay Holley Handler (43:36):
Thank you, Amee, and thanks for all you guys are doing at Accion to really push inclusivity in the FinTech industry and now climate solutions. It's just great to see you guys moving in this direction and I hope we can find ways to collaborate.
Amee Parbhoo (43:52):
And that's it for this season of Fintech for the People. Thank you to our listeners for tuning in over the past few weeks and taking this journey with us to learn about the challenges and new opportunities in Climate Fintech. We at Accion Venture Lab are excited to see this space, which is still developing, began to flourish with new innovations. As we heard over the course of the season, the capital flowing into climate investments is growing, yet the majority of those funds are still focused on climate mitigation. And while that's an important element in the fight against climate change, as investors focused on underserved populations, we see a need for innovations that also help low income individuals and communities prepare for, respond to and recover from climate-related events. That's going to mean reorienting ourselves away from just mitigation and toward the concepts of climate resilience, adaptation, and transition that our guests talked about this season.
(44:54):
We see a crucial role in all of that for financial services, whether that's new credit products, new insurance coverages, better payment models, all of which will be able to reach vulnerable populations. We've also discussed the importance of breaking down the problem of climate change into interventions that directly benefit the individuals and communities affected by it, while also providing incentives to encourage adoption and sustainability. Finally, we heard a clear need for more capital, talent and technology to address climate change, especially in regions that contribute the least to it, but are affected the most.
(45:33):
All of these ideas were brought by the guests of this season, and we'd like to thank them all. Howard Miller of the Center for Financial Inclusion, Maelis Carraro of Catalyst Fund, Pavan Kosaraju of AquaExchange, Abhishek Gupta of Semaai, and Lyndsay Holley Handler of Delta40 Studio. Thank you for breaking down what Climate Fintech means and emphasizing the power of financial tools to meet the needs of the most climate vulnerable populations around the world.
(46:03):
Thanks for joining us this season. As always, follow us and let us know what you think on Twitter or on our LinkedIn page where we'll be sharing more resources and perspectives on inclusive FinTech. We look forward to hearing from you and we'll be back soon with the next season of Fintech for the People.