Omidyar Network splits its investment arm in financial technology under the name Flourish, with capital of up to $ 300 million


After twelve years of investing in impact-driven financial services start-ups around the world, the Omidyar Network, which is the family investment office of the founder of eBay, Pierre Omidyar, creates its investment subsidiary in financial inclusion under the name of Flourish Ventures.

With a capital of up to $ 300 million for operations and investments, the new Flourish will continue to invest in the network's core mission of supporting businesses with the goal of to have a social impact and to obtain quality financial returns.

According to a report by FT Partners, the new company is already one of the most active financial services investors in the world.

This approach based on the double bottom line has already given results for the company.

"After ten or twelve years, investors became more interested in the impact investment space, and we had the opportunity to reinvent ourselves," said Tilman Ehrback, Managing Partner at Flourish, a group independent.

Flourish is actually the third product of Omidyar Network's investment and philanthropic support activities. Two years ago, Omidyar launched its emerging technology initiative in the United States under the name Spero, and last year launched a group focused on governance and citizen engagement called Luminate.

Now the organization, funded by Pam and Pierre Omidyar, will launch Flourish as the last independent entity.

"We think we are the right team in the right place at the right time," Ehrbeck said.

Flourish, he says, is embarking on a very different financial services environment than when the Omidyar network first identified financial services and inclusion as a priority area for its operations.

In the aftermath of the global financial crisis, financial services companies have indicated that they can not or will not provide the necessary access to consumers and small businesses. According to Ehrbeck, trust has eroded and, in a context of stagnant wages and changing work patterns, low- and middle-income consumers and potential entrepreneurs in emerging and established financial markets need all the money they need. 39, help possible.

In fact, a whole generation of entrepreneurs is benefiting from a set of technologies ranging from blockchain to platforms that the Omidyar network has helped to create thanks to its first investments in the market.

This includes companies such as Lenddo, an online lender that uses other sources of social media data to determine the solvency of plaintiffs who raised its first institutional capital in 2012 with investor capital, including the Omidyar network. . This investment and the subsequent merger of the company with another company in the Omidyar network, EFL, is indicative of Omidyar's – and now Flourish's – training role in growing a business.

"We had known each other for three years. As we sought to identify and adapt capabilities, we began to look for synergistic opportunities among smaller companies and could put something in place that would allow us to grow, "said Richard Eldridge, General Manager of Lenddo.

This ramp-up has allowed Lenddo to expand into other markets and offer a more robust product offering.

Stories like these are repeated across the Flourish portfolio of companies and talk about the type of value the company offers to holding companies, said Eldridge.

In fact, Flourish's global portfolio includes at least 40 financial technology companies serving households and small and medium-income businesses. From competing banks like Chime, Aspiration, Neon, Albo and Tez; insurance technology companies such as MicroEnsure and Kin; and asset optimization tools, including United Income and Scripbox.

Given the explosion in the supply of financial services in competing banks and in insurance technology offerings, Ehrbeck said it was easy for the company to create , to target and to expand.

With the spin-offs, Flourish takes over the existing $ 200 million portfolio that the team built in Omidyar and expands it with Omidyar's additional capital commitment.

The company is also starting to make its first outings. The company has achieved a return on investment 3 times greater than its investment in Asian Networks and has a new outlet in the sale of Ruma Go Jek.

"It's an exception for a successful team that is successful and Peter wants to double," says Ehrbeck. "What has been cut is the existing portfolio and a commitment to fund the next wave. The reason the number has flexibility. Pierre gives us the capital that we think we can deploy against any opportunity. "

Flourish will do more than invest capital in new financial services companies. It also has the opportunity to provide grants and encourage research on financial inclusion.

The company's recent work includes financing a 240-household study called the US Financial Journal, which provides reliable data on the disease that is affecting a large part of the American population.

Flourish's investments will fall into categories similar to those of the company's previous activities under the umbrella of the Omidyar network. Including alternative loans, competing banks, insurance technologies and low-cost digital infrastructure that can balance the playing field of financial service providers.

"We find a gap in the system and try to fill it and improve it," says Arjuna Costa, another partner of the new Flourish team from Omidyar's financial services group.

"We have had the impact of companies expanding, reaching and serving people, which has led to replicators and competitors and widespread adoption," said Costa.

Lenddo and his credit rating business is a perfect example of the trend, according to Costa.

"We started investing behind a number of companies that were considering using non-traditional data sets to try to score people," he said. "We selected different sets of data … we invested in the pioneering society using mobile payment data, the pioneering society using social media data and the pioneering society using psychometric data."

As these companies gain ground and attract new customers, demonstrating market demand, Omidyar's investments could extend to higher value offerings around financial services.

"Initially, we talked about these offers, but the other players in the industry looked at us and told us you're nuts. And now, it's become the issue at the table if you get into credit, "says Costa. "After building this digital infrastructure to allow credit … Now there is version two and version three of the upcoming infrastructure."

These higher value services are things like the farm credit business that Rose Goslinga has launched for farmers in Africa.

"We started our business during the first two years. They were the biggest investor in our seed series, "Goslinga said of Flourish's commitment to his company, Pula Advisors.

"Omidyar is extremely well known in the field of financial inclusion. They made their first investment in microinsurance ten or fifteen years ago. They are really perceived as the "blue chip" of financial investors or insurtech, "said Goslinga.

Thanks to their investment, it confirmed Goslinga's attempt to provide credit and working capital loans to small farmers.

"We had a number of clients at the time, but we did not have any type of institutional or financial investor at the time," says Goslinga. "It was a stamp of approval for many people later."

In mature markets such as the American Flourish, the approach is a little more nuanced to serve a market characterized by significant inefficiencies and basic inequalities, but in which disparities manifest themselves in different ways.

That's why Flourish turned to companies like Aspiration, which helps people manage their banks more ethically – by promoting sustainable investment portfolios and offering paid services to clients; and Propel, which helps US consumers manage their public assistance benefits.

"At the highest level, we look at the same criteria, but we care about financial health and technology to promote financial health," says Emmalyn Shaw, founding Managing Partner of the company's US portfolio. "The United States, as a more mature market, tends to be much more competitive."