Monica Brand Engel

Quona Capital

Executive: Monica Brand Engel, Co-Founder and Managing Partner
Investor Name: Quona Capital
Investor Type: Venture Capital Firm
AUM: USD745m
Year Founded: 2015
HQ: Washington, DC
Geo Focus: Africa, Asia and Latin America
Target Sectors: Technology that advances financial inclusion in emerging markets


Quona Capital announced an oversubscribed USD332m final close for Quona Accion Inclusion Fund III, its third fund for early-stage startups working on solutions to advance financial inclusion. What strategy and opportunities will the new fund target?

The new fund will by and large follow the proven formula of Quona’s first two funds. Quona will be deploying Fund III in roughly the same markets, with the same team using the same strategy. We say “roughly” because there are distinctions. For example, though Quona’s geographic remit is South Asia, Latin America and Africa, we have extended our reach into new geographies in each of these continents to Colombia, Thailand and Egypt, respectively. Similarly, though the core team has not changed, Quona has deepened its bench by adding new partners on the ground in Mexico City and Jakarta, as well as extending its fintech thesis to include embedded finance.

Quona invests across a diverse set of markets in Africa, Asia and Latin America. What connects these markets, from the perspective of adoption of fintech solutions?

One of Quona’s key value propositions is to bring learnings from similar models in other markets to aspiring entrepreneurs. For example, one of Quona’s early bets in SME lending, Konfio, inspired learnings regarding segment mix and product evolution that Quona ported to other B2B lenders in Latin America, Asia and Africa. This cross-fertilization is nuanced, as regulatory environments, stage of market development, competitive dynamics and other factors will shape how these businesses evolve. For example, Lulalend in South Africa targets a more established SME segment than Koinworks does in Indonesia—for a variety of market and business evolution reasons.

The financial services landscape has changed quite a bit since Quona first started investing in technologies enabling financial inclusion in 2015. What’s the through-line, in terms of your investment thesis and strategy? In what ways has it evolved?

The demographic and technological trends are as relevant today as when we began eight years ago. The ability of technology to radically improve access, affordability and quality of financial services to the underserved is the “through-line” thesis that has given rise to innovative models in alternative lending, payments, challenger banking, personal financial management, insurtech and a host of other fintech verticals that characterize the more than 60 companies in Quona’s growing portfolio.

There are a number of developments we find particularly exciting. First is the evolution of mature ecosystems like Brazil and India, which have produced multiple unicorns and analogs in neighboring markets. For example, Quona’s first SME challenger bank investment, Neon, was inspired by the success of Nubank and pursued the thesis that there could be similar success for a strategy targeting the mass market. Neon’s success inspired similar Fund II challenger bank investments in other markets in Latin America and globally.

Second, there are emerging ecosystems like Mexico and Indonesia where we see heightened fintech activity that matches the early days of our leading markets.

Lastly, these more established markets (like Brazil and India) are undergoing a “second wave” of fintech—which see a re-bundling of financial service offerings (versus the “pure play” models Quona saw in our first fund) and the next generation of innovation—like payment orchestration or embedded finance models.

What are some recent investments that are impacting underserved customers and businesses in your markets?

Twinco is the latest investment Quona made in the supply chain finance vertical. Twinco solves the specific pain point of purchase order financing, supporting manufacturers in developing countries like Bangladesh to finance operations that will allow them to fulfill their orders. Given the disruptions in supply chain and the backlog coming out of the pandemic, this type of financing has been invaluable in keeping factories running, and consequently, those who work in them surviving.

The investment environment in 2022 has affected tech company valuations across global markets, as well as access to capital. How are you responding and what has been the impact on your portfolio?

Quona’s portfolio companies have been proactive and professional in managing first the COVID crisis and now the macroeconomic malaise. They have rationalized operations, honed focus on unit economics, and slowed down burn as they pursue a path to profitability. Where the current macro slowdown most impacts our companies are in follow-on rounds, as the contraction in the capital markets has been more acute at the later stages. Quona correspondingly has slowed down its capital deployment as it monitors the cash flow needs of its companies and recalibrates reserve allocations.

Quona is a VC firm with roots within Accion, a global nonprofit committed to financial inclusion. As a venture investor, you’re committed to maximizing returns for your investors. How do these pieces fit together?

Profits with purpose have always been core to Quona’s strategy. We screen every investment to determine whether it is meaningfully improving access and quality of financial services to the underserved: if that is not affirmative, we move on. There can be tensions when a company wants to move up market, for example, but we mostly find that the businesses we’re supporting have improving access to the underserved.

How does Quona engage portfolio companies with respect to ESG best practices?

Quona measures impact on a quarterly basis using a framework developed in collaboration with our financial inclusion peers—assessing the access, quality and market dimensions of our portfolio companies’ work. ESG is part of Quona’s efforts to be good corporate citizens and mitigate risk—with a particular focus on “S” (by monitoring diversity and inclusion, particularly around gender) and “G” (by formalizing governance and actively engaging at the board level).