NetSpend founders launch $100m fund for financial services start-ups

Source: MPower Ventures

MPower Ventures, LP, a socially committed venture fund dedicated to investing in solutions that empower the underserved worldwide, today announced a commitment worth $100 million to invest in seed and early stage companies developing financial services and products for underserved markets.

MPOWER Ventures also announced its first investment in MPOWER Labs, Inc., a global research and development incubator created to generate technology and product innovations and accelerate the development of MPOWER Ventures portfolio companies.

The capital committed to MPOWER Ventures comprises personal investments by MPOWER Ventures principals Roy Sosa, Bertrand Sosa and Jorge Vergara Madrigal. The Sosas pioneered the prepaid debit market -- projected to reach $470 billion by 2010(1) -- as co-founders of NetSpend. Vergara is the owner of Grupo Omnilife and the Chivas soccer clubs of Guadalajara, Mexico and U.S. Major League Soccer.

"Though we started in the realm of financial services, we have come to believe there are many industries in which market failures have left a majority of the world without adequate choices to improve their lives, including healthcare, education, and energy," said Roy Sosa, managing
partner, MPOWER Ventures and chief executive officer, MPOWER Labs. "We believe that strategic investment can fuel the development of private-sector solutions to these persistent social problems, and to that end we created MPOWER Ventures as a venture fund run by entrepreneurs for entrepreneurs who believe in the common cause of empowerment and want to devote their passion for innovation to making positive changes in the world."

Seeding Social Capitalists for Social Change

Fueled by the belief that the combination of innovation, collaboration and disruptive technology can stimulate fundamental change, MPOWER Ventures seeks to free latent economic potential and generate meaningful social impact in underserved markets around the world. Recognizing that underserved markets hold great promise and great risk, MPOWER Ventures invests in accordance with three core principles designed to ensure portfolio companies succeed in achieving their business and social objectives:

  • Extended Investment Horizon -- Maintintains a 15-year ininvestment horizon to give portfolio companies adequate time to overcome barriers to entry, to make necessary investments for meaningful social impact, and to become self-sustaining enterprises before returning capital to investors
  • Active Investment Philosophy -- An investment-driven fund that activates committed resources only after identifying an investment opportunity and nurtures close partnerships with founding entrepreneurs
  • Dual Bottom Line -- Measures performance in dual terms by the revenues portfolio companies return and social impact they produce and reinvests returns to advance new models for social change.

"We thought carefully about how to engineer a model for venture funding that would support our vision to create self-sustaining companies that not only return profits but also truly impact lives," said Bertrand Sosa, managing partner, MPOWER Ventures and president, MPOWER Labs. "The social capital model of investing seemed ideally suited to our vision for the way
we believe entrepreneurs can create value, promote change and make a positive impact in the world."

Rethinking Financial Services Worldwide

Through a close partnership with MPOWER Labs, MPOWER Ventures amplifies the financial and social impact of its investments and accelerates the introduction of financial services to underserved markets. More than two billion people worldwide lack access to basic financial services.(2) To fulfill its mission, MPOWER Labs ensures portfolio companies are fully
operational from inception, offering three core shared assets to minimize operating costs, rapidly scale operations and create combinations of products and services that multiply the numbers of underserved consumers they can reach and retain:

  • Technical and Business Expertise -- A team of specialists and consultants advising portfolio companies and building infrastructure in technology; finance and operations; compliance and legal; risk modeling and data analysis; human resources; business development; and marketing and branding
  • Technology Platform -- A set of proprietary systems available to all portfolio companies with global support capabilities for multiple regions, geographies and currencies, including a payment transaction processing platform equipped to support a range of new and emerging
    payment solutions; customer service and back office support; and product fulfillment services for retail and direct-to-consumer products
  • Research and Development -- An in-house research department overseeing research partnerships and initiatives and exploring concepts for new products and services and examining the factors behind market failures and exclusion.

"We've built a long-term partnership based on our shared passion for empowerment," said Jorge Vergara, managing partner, MPOWER Ventures, "and we believe that by investing in entrepreneurship and innovation we can reach people around the world whom the market has so far failed to serve with the products and services they want and deserve."

(1) PELORUS Group, "Plastic Promise," The Economist, 6/6/2006
(2) VRL KnowledgeBank, "Strategies for Banking the Unbanked: A Global Market Opportunity," Ray Cain, 1/1/2008

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