AFRICA – Quona Capital, an emerging market venture capital (VC) firm, has raised US$332 million for its third fund, exceeding its US$250 million aim and significantly exceeding the US$203 million it disclosed for its second fund in 2020. This raises the VC’s total fund raised to over US$745 million.
The funding will help fintechs establish solutions that have an impact on customers and provide them with fundamental financial solutions.
Fund III investors include renowned global asset managers, development financing institutions, investment and commercial banks, insurance firms, foundations, and university endowments, according to Quona.
Quona Capital was founded in 2015 as a spin-off from Accion, a global leader in microfinance, to meet the growing need for alternatives to traditional financial services. Its managing partners are Monica Brand Engel, Jonathan Whittle, and Ganesh Rengaswamy.
“Traditional financial services had hit a wall,” Brand Engel said in an interview, speaking on why the company was created.
“We needed new approaches that balanced tech and touch in a more nuanced way so that we could achieve our goal of radically improving both access and quality of financial services to the underserved,” she said.
Quona’s investment strategy combines profitability and impact investing. The venture capital firm operates in areas such as Africa, Asia, and Latin America, capitalising on these regions’ developing financial markets while ensuring that investment solutions are tailored to underserved and financially excluded clients and enterprises.
Quona has carefully monitored the impact of its investments from its beginning and has contributed to the evolution of the impact investment industry. It was an early adopter of IRIS, the Global Impact Investment Network’s standardised impact measuring system (GIIN).
According to the VC firm’s most recent impact report, 80% of the 8.8 million SMEs supported by its portfolio businesses were previously underserved.
Quona has maintained its impact-fintech presence in Africa, investing in businesses such as Yoco and Lulalend in South Africa, Wasoko (previously Sokowatch) in Kenya, Cowrywise in Nigeria, and Zoona in Zambia, which was bought by Mukuru in 2020.
Despite its significant focus on impact investing, Quona prioritises portfolio company profitability and will not invest unless a firm has proven product market fit (PMF) inside its “zone of effect.”
Brand Engel, the co-founding MP who oversees Quona’s investment in Africa and the Middle East, expressed confidence in the firm’s investment thesis, citing the performance of past funds as evidence of the potential of impact investing.
“Since our earliest days, Quona has been dedicated to expanding the frontiers of financial inclusion — investing with conviction in markets and technology-enabled models, improving access and quality of financial services for the masses,” she said in a statement.
“Our prior fund performance, robust pipeline of inclusive fintechs, and growing LP interest in our offerings are ringing endorsements of our view on the prospects of impact-oriented venture investing in emerging markets,” Brand Engel added.