Editor’s Note: This article was contributed by guest writer Marta Zaccagnini Senior Manager at Village Capital.
Technology has a huge potential to positively support refugees and other migrants fleeing their home countries for economic or social reasons. Tech products can help connect refugees to their host countries’ banking systems (ever more important as Europe becomes increasingly cashless), enter the housing and job markets safely, communicate in a new language and culture, and connect with scattered family and friends. The existing aid system is also ripe for disruption, from managing vulnerable clients’ data to simplifying logistics in hard-to-reach places and tracking and moving donations across borders transparently. There are many ways that tech can increase efficiency and bring down the cost of serving an ever-increasing number of displaced people.
But refugee tech is a notoriously difficult sector to succeed in, with countless well-intentioned startups failing to scale. As a former humanitarian worker turned impact accelerator manager, I’ve spent a lot of time talking to startups, NGOs, investors and other supporters working in this area. Here are some of the highest potential startups that I have encountered during my research, as well as some of the barriers that companies in this nascent sector face.
The solutions – the top Refugee and Aidtech companies to watch
Identification is a key challenge for refugees as it is often the gateway to access basic necessities such as healthcare, banking services, jobs and housing. In a rush to leave their homes, many refugees simply don’t have their government ID with them when they reach a new country, and even if they do, the top refugee-producing countries are often on sanctions lists which makes their ID’s unusable. Thankfully a good number of startups are tackling this issue from Proofspace (UK), Gravity Earth (France), and Diwala (Norway) providing digital ID solutions to Simprints (UK) who are working on biometrics.
Other critical integration solutions include Pipit (Ireland), Bloom (UK) and Welcome Place (France) which are all fintech solutions for migrants in Europe. Pacto (Poland) helps Ukrainian refugees navigate the rental market in Poland and Doycet (Germany) is working on health tech solutions for vulnerable users. There are a wide number of startups working on education and employment opportunities for refugees – critical to reducing the government social security budget by allowing refugees to contribute financially to their new countries. These include Chatterbox (UK) and Natakallam (France), MyGrants (Italy), Just Arrived (Sweden) and Niya (UK) in the employment arena, and Tespack (Finland) and Funzi (Finland) who are working on education-related products.
Lastly, a few of the top startups bringing solutions to the humanitarian sector include Clear Tech (Greece) working on translation products for displaced people, Needslist (US), which helps first responders log their needs into a real-time database, linking them with donors and partners, and Aid: Tech (Ireland) bringing transparency & traceability to the flow of funds for Governments, NGOs & Charities.
The Challenges – finding the right customers, business model and funding
It’s encouraging to see the number of viable startups working to support refugees growing, but for every success story, there are many more startups (more than 200 from the 2016 ‘migrant crisis’ era alone) that had to close their doors due to insurmountable challenges around their business model, or customer acquisition, partnership and fundraising strategies. Here are some thoughts based on my research on the main barriers to scale for startups working in this area.
Customer acquisition is a tough one. Businesses targeting refugees have two main routes to customer acquisition – B2C (direct to refugees) or B2B (through aid organisations, governments and charities). The B2C route is challenging for many reasons: connecting and building trust within refugee communities, varying levels of digital interest and literacy and the questionable ethics of testing new unestablished products on vulnerable populations. The B2B route may seem like an easier way to access a large customer base, but the realities of navigating bureaucratic and often stretched refugee organisations are one of the biggest challenges the startups I have spoken to have faced. Thankfully this is becoming easier with the recent spout of humanitarian acceleration programs, and the creation of innovations departments in most major aid agencies.
For startups working in the fintech and ID space, inflexible European regulations on Know Your Customer (KYC) and Anti Money Laundering (AML) make it difficult to innovate new pathways to financial access.
Finally, a major challenge for refugee and aid tech startups is to build a flexible and sustainable business model that makes their product attractive to investors – changing their perception as a target for philanthropic spending in the eyes of investors who are instead looking to fund sustainable tech for good products. Traditional investors tend to shy away from startups that have survived on grant money for long periods of time, as they haven’t been able to demonstrate their ability to return an investment.
It is not only entrepreneurs who have to change their mindset if the refugee tech phenomenon is to fully take off; investors also need to challenge their assumptions about risk too, for example about refugees’ loan repayment rates. With around 22 million displaced people in Europe now, the stakes have never been higher.