Wayra, the Telefónica backed accelerator network, is launching a new #startup program in the UK that aims to tackle the so-called ‘poverty premium’ — whereby people on low incomes pay more for some goods and services.
The program, called Wayra Fair By Design, will support seven startups per year, falling into four broad areas: energy (primarily electricity and gas); finance; insurance; and geo-based costs which can be imposed due to someone’s geographical residence, such as paying higher prices for food, transport and insurance. Wayra says digital exclusion may also factor in this category.
Accepted startups can expect to receive around £70,000 in cash and services, including access to Wayra’s mentoring and investor network, as well as opportunities to work with Telefónica and its partners; and full access to co-working space at the Open Future_ North building in Oldham, which opens tomorrow.
Wayra says the program will invest in a combination of Community Interest Companies and charities, as well as private limited companies, including tech businesses. Start-ups developing solutions to open up more affordable credit options would be ideal candidates for the program, it adds.
Commenting in a statement, Gary Stewart, Director of Wayra UK, said: “It should not cost more to be poor. An entrepreneur’s central task is to offer a compelling, sustainable solution to big problems, and we can think of fewer problems bigger or more worthy of a solution than this one. We are eager to work with start-ups to make real progress in the battle against inequality.”
The program is backed by a new investment fund — called the Fair By Design Fund — which Wayra says has £8 million ready to deploy now, and a goal of raising £20 million in total — to invest in companies tackling the poverty premium, both via the accelerator program and in separate investments across the UK.
To be clear Wayra itself is not contributing to this fund. Funding is coming from a partnership between financial institution Big Society Capital, social policy research charity the Joseph Rowntree Foundation, investment fund manager Finance Birmingham and VC Ascension Ventures. The latter two will be managing the new fund.
The fund will invest in companies from seed through to Series A stage and beyond, including seeking deal-flow and co-investment opportunities from other funds, VCs and angel investors.
In another supporting statement, Chris Goulden, deputy director of policy and research at the Joseph Rowntree Foundation, added: “Reducing the cost of essential goods and services is critical for solving poverty in the UK. The poverty premium costs low-income households on average £490 a year. With higher inflation and low wage growth, tackling these premiums is vital for families struggling to make ends meet. This fund is an important step towards finding viable solutions to reducing extra costs faced by those on low incomes.”
Update: A spokesman for Wayra said it will begin taking applications tomorrow, and expect the first cohort to start in September. The program will run for 10 months, while the funding for the program is intended to last three years.
“In terms of the accelerator, we are looking for potential category winners. We don’t apply any special criteria to our socially-focused start-ups, other than that they try and solve a big social problem. Beyond that, we see them as no different from our other start-up,” he added.