MICROCAPITAL BRIEF: Accion Venture Lab Takes Equity Stake in Colombian Fintech R5, Provider of Online Loans, Car Insurance

Accion Venture Lab, a unit of US-based NGO Accion, recently purchased an unspecified amount of equity in Colombian financial technology (fintech) firm R5, an online insurance and lending platform. Most of R5’s borrowers pledge vehicles as collateral and use the loan proceeds for refinancing debt, business investment or home improvement. The firm also connects customers to credit cards and other bank services as well as offers SOAT insurance, which the government requires drivers to carry in case of accidents. R5 plans to use the new funding to strengthen its existing services as well as to adapt to the COVID-19 pandemic by: (1) offering repayment deferrals to current clients; (2) launching new products for motorcycle delivery drivers; (3) expanding insurance offerings for telemedicine; and (4) developing credit calculators and other resources for clients.

The managing director of Accion Venture Lab, Vikas Raj, stated that “R5’s…quick responsiveness to the current environment demonstrates their commitment to their customers’ financial health and well-being.”

Established in 2018, R5 offers loans of COP 3 million (USD 760) to COP 50 million (USD 12,700). These loans carry monthly interest rates of 1.5 percent to 2.15 percent with terms of six to 36 months. Financial data on the firm are not available.

Accion Venture Lab, the “seed-stage investment arm” of Accion, was created in 2011. Its mission is to invest “in technology and [other] new approaches that help underserved people and small businesses benefit from the world’s formal economy.” The majority of Accion Venture Lab’s investees are in the microfinance and fintech sectors. Its typical investment is an equity placement of USD 300,000 to USD 500,000. As of May 2020, its portfolio consists of 38 enterprises.

Founded in 1961, Accion is a nonprofit that seeks to alleviate poverty by offering services such as microenterprise loans and business training. The organization has 110 partner microfinance institutions (MFIs) providing financial services to entrepreneurs in 50 countries in Africa, the Americas and Asia. As of 2018, Accion reports total assets of USD 345 million.

By Madigan Ruch, Research Associate

Sources and Additional Resources

Accion press release on R5 investment
https://www.accion.org/accion-venture-lab-invests-in-colombian-fintech-r5-to-address-financial-needs-of-the-underserved

R5 homepage
https://www.grupor5.com/

R5 vehicle loan rates
https://www.grupor5.com/credito/solicitar-credito-v1?hsCtaTracking=28bae704-5981-44ac-8a9e-6e57325a1e76%7C31ddefe7-8073-4569-abac-b410a4878aa1

Accion financial information
http://content.accion.org/wp-content/uploads/2019/09/ACCION-International-12-31-18-17-FINAL.pdf

Previous MicroCapital post on Accion Venture Lab
https://www.microcapital.org/microcapital-brief-accion-venture-lab-exits-from-maj-invest-buys-equity-in-microfinance-institution-aye-of-india/

Previous MicroCapital post on Accion
https://www.microcapital.org/microcapital-brief-accion-venture-lab-adds-33m-to-fintech-investment-pool/

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