Scaling access to finance for early-stage Enterprises in Emerging Markets: Lessons from the Field

Many SMEs in developing countries have difficulty securing the financial backing they need to grow – and are often referred as the ‘missing middle’: they have outgrown microfinance but do not yet have access to regular financial services. While challenges are abundant for all missing middle segments, early-stage enterprises face even bigger hurdles, and the lack of financing is a major constraint to their growth.

The report seeks to explore how to improve the scalability and viability of early-stage finance provision, thereby reducing the need for philanthropic capital and subsidies to the local providers of finance and support to early-stage enterprises. The landscape exercise was used to define and prioritize “archetypes of early-stage finance provision” as the focus of the report.

Business accelerators, business angel networks and venture capital funds were selected as three key equity-based archetypical models to be studied in more detail, together with the broader category of supplemental “non-traditional” debt options. The report provides a set of actionable recommendations as to what could done to strengthen the sustainability and scalability of early-stage enterprise finance provision in emerging markets.