Coronavirus response recommendations for the Accion Venture Lab portfolio

AUTHORS

Tahira Dosani

Accion Venture Lab invests in and supports early-stage startups in the inclusive fintech space. We back founders who have a vision to improve the access, quality, and affordability of financial services for the large market of underserved individuals and small businesses who don’t have the financial tools they need to improve their lives.

The work we do is even more important in times of global crisis, fear, and uncertainty as it is often those underserved groups who are disproportionately affected.

Here is the email we just sent to our portfolio companies on how we are addressing the situation and with some thoughts on how they can approach it.

Dear Founders and CEOs —

I wanted to take a minute to let you know how Accion is currently managing the unfolding coronavirus situation and to share some thoughts on how we can help you think about navigating our new and uncertain reality. As a leader, you have to think both about your people and about your business in the midst of this evolving situation.

At Accion, we have been closely monitoring the news about the growing numbers of COVID-19 cases around the world. Our first concern is for the safety and well-being of our staff, those we work with, and those we aim to serve. We are working carefully to protect the safety and well-being of these individuals, act responsibly to prevent the further spread of the virus, and minimize disruption to our mission-driven activities that support vulnerable people around the world who are likely to be deeply affected by this crisis. We are consulting regularly with guidance from the WHO, CDC, and local public health officials, and we anchor our decisions on their guidance.

In terms of specific actions, we have:

Formed an internal quick response team of our senior leadership to monitor and assess the situation, keep our staff informed, and determine appropriate action.
Clearly communicated to our staff that their health and well-being is paramount and empowered them to make the decisions that are best for them, their families, and their communities.
Restricted all non-critical travel for our staff.
Ensured that all staff are equipped and ready to work remotely, and as of today, are encouraging all global staff to work from home to minimize risk and spread of the virus.
Put in place a policy to ensure that all guests to our offices have not recently been to the CDC’s restricted countries nor exhibit symptoms including fever, cough, shortness of breath, or other flu-like symptoms.
Postponed or canceled public and industry gatherings hosted by Accion.

On the people front:

We believe that your first priority needs to be on the health and safety of your people — both physical and psychological.

Minimize or avoid travel: we know that our portfolio operates around the globe, and the situation on the ground varies in each country. That said, we strongly recommend that you avoid travel, particularly international travel, starting immediately. Given the evolving situation, travel bans, quarantine requirements, and travel disruptions, unless it is absolutely critical, we believe that traveling right now is likely to be more disruptive than productive for you and your teams.
Get set up and ready for remote work: it is likely that things will get worse before they get better, and it is possible that many organizations will need to implement a work from home policy at some point to protect staff from potential exposure while commuting and in the office. As such, we suggest that you take a day to test having non-field staff work from home. This will allow you to understand what infrastructure and processes you may need to put in place to ensure that remote work is successful. This may mean purchasing new tech or equipment, setting up tools for collaboration remotely, and helping staff maintain productive remote work environments. At the bottom of this email are some resources on how to most effectively work remotely.
Keep a pulse on team sentiment and concerns: this can be a stressful time for many, and people will respond differently to that stress. People’s individual risk levels and those of their families, as well as their individual situations involving things like child and family care, can mean varying levels of sensitivity and concern about the situation. It’s important to know how people are feeling and to be supportive of them and their concerns during this time. Be flexible in your approach to individual team members, and work to provide staff with flexibility and resources to make the decisions that are right for them.

On the business side:

Some level of business disruption is likely inevitable. You are all working with underserved individuals and small businesses in your markets, and these populations are likely the most vulnerable to the impact of a global pandemic. Lower-income and underserved individuals are less likely to have access to quality, affordable health care and paid leave to care for sick family members; their livelihoods are particularly vulnerable to the business interruptions likely to result from COVID-19; and they are less likely to have adequate savings, insurance, or credit that can help them weather economic downturns. Small businesses often cannot operate with remote workforces and are particularly vulnerable to shifts in supply and demand in the economy. Their revenues and their costs are likely to be adversely impacted. Moreover, the capital markets are in flux, and we expect a tightening of the availability of both debt and equity globally.

This will have meaningful implications on your revenues, your costs, your PAR/NPL/default rates, your claims ratios, your cash flows, and your runway.

Given the broad range of businesses and business models in our portfolio, each of you will need to think about the implications on your business, your customers, your supply chains, etc. We do have a few specific thoughts and recommendations:

Build a reforecast: it’s imperative that you start to think about how this is likely to affect key revenue and cost drivers. We suggest that you start making some assumptions about how it’s most likely to affect your business.

Actively manage your runway: make sure you know when you’ll be out of cash. Run some scenarios on this calculation and think about what happens if revenue slows down or costs increase meaningfully. It’s worth thinking through a contingency plan if you need to manage your burn rate. Delay major spending increases and actively think about the implications of new hiring right now. If you are in the middle of fundraising right now, do everything you can to get it closed as soon as possible. If you have a fundraise planned for later this year, it makes sense to project that it will take a bit longer than it might have otherwise. Also, consider raising more than you may think you need right now.

Work flexibly with your customers: your customers are going to be going through a number of challenges over the coming weeks and months. It’s important to ensure that they see you as an ally and a source of support. Exploring flexible repayment schedules, etc., can make a huge difference in a time like this and can be instrumental in building long-term customer loyalty and driving lifetime value.

Carefully manage offline customer touchpoints: many of you rely on touch as well as tech. You may need to rethink how these are managed. This environment may be one that enables you to shift certain current touchpoints to digital ones, to minimize risk to your staff and your customers.

Maintain focus on impact: consumer protection is incredibly important in a time like this. Consider what you can do to minimize negative impact on lives and livelihoods of your customers. Would it make sense to eliminate late fees during this period? To be more flexible in reporting to credit bureaus? To allow longer grace periods? While there may be some short-term costs of this, it will set you up well for the long-term.

Ensure clear and updated communication with your board and investors: this is a topic we expect to be raised at upcoming board meetings. Continue to be open and transparent with your investors, and let us know how we can be helpful.

We are here to support you. Our entire team is available by email/WhatsApp at any time. We’re happy to schedule a call to talk more specifically about the implications on your people and business and to work with you to think about what you can do.

Your business and the impact you have on the customers you are serving remains incredibly important. Stay safe and healthy, and let us know how we can help.

Best,
Tahira

Additional resources on remote work: