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Omidyar Network Spins Off Flourish, A Financial Inclusion Venture Firm

Anne Field | April 25, 2019

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Creating a more inclusive economy is a pressing challenge. Acknowledging that, Omidyar Network has spun off its financial inclusion initiative into a standalone venture firm. Called Flourish, it backs entrepreneurs forming impact-oriented financial services ventures and continues the work of the past twelve years as part of Omidyar Network—including its existing $200 million portfolio. Flourish will begin its new life with a fresh $300 million at its disposal, financed by eBay founder Pierre Omidyar and his wife Pam.

The move is the latest spin-off from Omidyar and part of a larger effort to update its strategy and help usher in a more fair and inclusive economic system.

“We felt it was important to start as a new firm that has a view of what a fair system would look like, is purpose-driven and works with like-minded entrepreneurs whose innovations help people achieve financial health and prosperity,” says Flourish managing partner Tilman Ehrbeck.

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Tilman Ehrbeck of Flourish

The timing was right, says Ehrbeck. While new fintech ventures have allowed more than one billion people around the world to enter the conventional financial world, in many emerging markets more than half of working age adults still live and work in the informal economy, according to Flourish. In the U.S., a majority of households are not financially healthy and live paycheck to paycheck.

Moreover, since the global financial crisis, mainstream financial services companies failed to provide much help to regular folks and small businesses, in the process hurting whatever trust there may have been in those institutions. Inequality has grown, and low-and-middle-income workers are faced with stagnant wages and livelihoods threatened by technological advances.

For those reasons, among others, Omidyar founder Pierre Omidyar “decided it was time to double down, and more,” says Ehrbeck.

Flourish’s investments will continue targeting areas as alternative credit, insurance tech, new banks and digital infrastructure. Its portfolio includes some 40 fintech ventures focused on financial inclusion in the U.S. as well as abroad. That includes Steady, a startup that connects U.S. workers in the gig economy with gigs and helps them increase their earning opportunities; Lenddo, which uses alternatives methods for credit scoring; Propel, whose software helps low-income Americans better manage their social safety-net benefits; and Aspiration, a new socially responsible online bank, is another.

Patient Capital

Investments will largely be seed and Series A rounds, although the firm could participate in later rounds for enterprises already in the portfolio, according to managing partner Emmalyn Shaw.

Flourish’s web site says it invests in “entrepreneurs whose innovations help people achieve financial health and prosperity.” Acknowledging the challenges that can sometimes entail, it deploys “patient capital “with a long-term perspective.

financial inclusionFlourish will also provide grants to fund “sector specific public good” work, says Ehrbeck. That can include anything from research related to financial inclusion, like the U.S. Financial Diaries, which tracked 235 low- and moderate-income households over the course of a year to collect data on how families manage their finances on a day-to-day basis, or issues related to regulations and policy.

It’s Omidyar’s third spinoff. Last year, it turned its governance and citizen engagement initiative into Luminate. Before that, Omidyar spun out its emerging technology effort into Spero.

It’s all part of a larger strategy. In addition to spinning off initiatives into independent organizations, Omidyar plans to focus on what it sees as a core set of pressing issues, including “reimagining capitalism, promoting the beneficial use of technology, building bridges in a pluralistic world and fostering individual capabilities and empowerment,” according to a recent blog post by Mike Kubzansky, managing partner at Omidyar. With an approach that has combined impact investing with traditional grant making, the organization has committed $1.3 billion to more than 700 organizations.

Anne Field is a New York-based journalist who writes about social enterprise and impact investing. A version of this article originally appeared on her Not Only For Profit blog on Forbes.com.

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