Visa and Mastercard push to make VC investing more diverse Despite research showing diverse leadership helps startups and the overall economy, a substantial chunk of investment still goes toward firms started by white men. Visa and Mastercard are working to address this by using their international networks to find opportunities for overlooked businesses. Both card networks at the end of the year expanded financial inclusion programs with a focus on women and minority-owned startups. The card brands and a variety of payment firms VC investors substantial gap “The discrepancy in VC funding in the U.S. and abroad is a major concern,” said Sabrina Tharani, senior vice president of fintech and venture partnerships at Mastercard. “Diverse founding teams build better businesses.” Black and Latino founders receive about 1.5% of total U.S. venture funding, according to McKinsey The issue is harming the overall economy and the investors themselves, according to McKinsey. The firm’s research found that if VC investment was equal, Black and Latino-owned firms would produce an additional $1.6 trillion and $2.3 trillion in revenue in the U.S., McKinsey said, adding that firms with diverse founding teams produce 30% higher returns for their VC investors than white-male-founded firms. The lack of diversity in leadership also exists in more mature companies. Twenty-nine percent of Black, indigenous or women of color and 41% of BIPOC men are in director roles at financial institutions, according to Arizent Finding new startups Mastercard’s Start Path in Solidarity startup accelerator added five early-stage startups founded by women and people of color in late December. The firms include ChargerHelp, a Los Angeles-based provider of repairs and maintenance for electric fueling stations; GoTackle, a Chicago-based seller of technology for small business; Home Lending Pal, an Orlando-based supplier of analytics tools to homebuyers; Hopscotch, a New York-based small business payment fintech; and Meter Feder, a Pittsburgh-based parking and ticket payment company. Start Path in Solidarity program “Our participation broadened our thinking about bringing products and services to unbanked and underbanked communities,” said Wole Coaxum,, founder and CEO of MoCaFi, a Newark, New Jersey-based fintech, in an email. MoCafi has participated in Mastercard’s Start Path, and Mastercard is also an investor partnered with BNY Mellon As part of the program, Mastercard tries to use its scale to provide a network effect for new startups. That can include access to the card company’s technology as well as its scale. “There are hundreds of millions of endpoints and 3 billion cards in the market,” Tharani said. “Our acceptance network is our biggest asset.” Visa and Mastercard, which both have strategies to find revenue beyond card payments, each have millions of consumers, merchants and card issuers. That audience can give an indirect boost to payment trends such as virtual cards generative AI “Large international payments companies like Mastercard and Visa have resources such as expertise, technology, and distribution channels that can be hugely valuable to fintech startups,” said Zil Bareisis, head of retail banking and payments at Celent. “Having programs that make them more readily available to underserved communities is admirable.” Check writers The gender gap can also be found in the investment community. Women make up 17.4% of decision-makers at VC firms in Southeast Asia, according to Nikkei Asia Center for Strategic and International Studies “Most intermediaries between founders and capital are not controlled by women,” said Graham Macmillan, president of the Visa Foundation The foundation has made an undisclosed investment in Beacon Fund, a women-led investor in Southeast Asia that provides financing for women-founded businesses in the region. Beacon, which did not provide comment for this article, has a portfolio that includes Noa Nang Organic, a Vietnam-based rice producer. Noa Nang Organic sells services that help farmers in the region — mostly women in the Mekong Delta — sustainably grow rice. It also trains farmers in new agriculture techniques and pays the farmers about a third above market rate. “At the end of the day, we want to see more micro businesses around the world,” MacMillan said. “That leads to more economic participation.” The Visa foundation also recently announced that it would invest $100 million in women-led small to medium-sized businesses in the Asia-Pacific region over the next five years. The card brand additionally launched an initiative to accelerate small-business development in the U.S., Indonesia, Mexico, Peru, Philippines and Vietnam, with other markets to follow. The Visa program includes elements of a startup accelerator, as well as access to emerging payment technology and financial training. “Access to training and development building is important, but what is essential is access to capital,” MacMillan said. “While we talk about growing women-led businesses, one key is to invest in funds led by women as well. There are a lot of gaps in investing.” A lot of fintech funding gets cornered by founders who already have connections and know the right people, rather than necessarily have the best ideas or technology, according to Gilles Ubaghs, strategic advisor for commercial banking and payments at Datos Insights. “Large-scale organizations like the payment networks can help meet some of those challenges in access to funding and broader market visibility,” Ubaghs said. Visibility is also important in attracting users, according to Ubaghs. “Getting awareness of a fintech is half the battle in gaining end user customers,” Ubaghs said. “The networks and similar large programs have that global reach into all corners of the market which can help them gain visibility and awareness of what they are up to.”
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